2023-11-20 13:28:31 ET
Shares of Dorian ( NYSE: LPG ) rose as much as 10.3% on Monday after Jefferies upgraded its rating on the LPG shipping company to "Buy" from "Hold" along with a price target raise.
The broker research firm changed the price target on Dorian to $50 from $37.
Jefferies said that the company stands to benefit from Panama Canal restrictions, which it claims to be a "game-changer in an already tight VLGC market", and rising U.S. exports, which continue to underpin the global LPG market.
"The recent Panama Canal restrictions, however, change the outlook considerably, tightening VLGC capacity and raising both spot and forward charter rates. The sector is already underpinned by strong US liquids export growth, which is likely to continue next year," Jefferies analysts wrote in a November 20 report.
"We are raising our VLGC rate forecast to $75,000/day for 2024, up from $45,000/day. This boosts our Dorian EPS estimate for next fiscal year to $8.67 from $3.68 (consensus is $4.02). Over the next four quarters we project $10/sh of FCF generation. Even assuming a conservative 20% target FCF yield would give Dorian upside to $50," they added.
LPG stock has more than doubled in value the last 12 months.
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Dorian shares rise on "buy" rating and PT hike by Jefferies