DHT - DHT drops sharply after Q1 miss Jefferies downgrade

2023-05-04 12:35:22 ET

DHT Holdings ( NYSE: DHT ) -9.8% in Thursday's trading after narrowly missing expectations for Q1 GAAP earnings and revenues , and Jefferies analysts pointed to the shipper's soft near-term VLCC outlook in downgrading the stock.

Q1 results came in well above year-ago levels but fell broadly from Q4 2022, as after-tax profit swung to a Q1 profit of $38M from a loss of $17.3M a year earlier but fell from $61.8M in Q4 2022, shipping revenues of $131.5M rose from $76.4M a year earlier but fell from $166.5M in Q4, and adjusted EBITDA rose to $71.9M from $14.4M a year ago but fell from $95.4M in Q4.

Jefferies downgraded DHT ( DHT ) to Hold from Buy with a $10 price target, cut from $12, noting the company's Q2 bookings "point to another solid upcoming earnings and dividend [but] OPEC's recent production cut and weaker refining margins are a headwind that are likely to impact the earnings outlook as 3Q approaches."

DHT's ( DHT ) Q2 bookings have softened recently as expected but rates still remain strong, Jefferies analyst Omar Notka said, as bookings now stand at $70.3K/day for 65% of available spot days, bringing the combined spot and time charter average for the fleet to $55.8K/day.

But Notka lowers his Q3 VLCC spot rate forecast from $50K/day to $30K and Q4 VLCC forecast from $50K/day from $40K; the company's earnings breakeven is $26K/day.

More on DHT:

• See financial and valuation comparisons to sector peers
• SA analysis: DHT Holdings In A Sweet Spot
• Stock price return: 3% loss YTD, 42% gain in the past 12 months

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