Scorpio Tankers ( NYSE: STNG ) +2% in Tuesday's trading as Deutsche Bank upgraded shares to Hold from Sell with a $38 price target, raised from $34, saying the operational scale and spot exposure of the company's fleet is positive in the current strong product tanker rate environment.
Deutsche Bank's Chris Robertson also believes the key driver of long-term value creation in shipping is low risk, low debt and low breakevens; he will continue to monitor Scorpio Tankers' ( STNG ) capital allocation, and if product tanker rates stay high for a sustained period, "the company could fundamentally improve its capital structure, and in turn its breakeven."
Also in the shipping space, Robertson initiates International Seaways ( INSW ) with a Buy rating while remaining enthusiastic on Euronav ( EURN ) and Star Bulk Carriers ( SBLK ), citing management teams with strong track records on capital deployment, good corporate governance standards, and capital structures that allow for surplus free cash flow to the equityholder on a mid-cycle basis.
Scorpio Tankers ( STNG ) is "well positioned to capture increased demand with [the] largest, youngest fleet vs. tanker competitors," Corey Zimmerman writes in an analysis published on Seeking Alpha .
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Scorpio Tankers upped at Deutsche Bank on strong tanker rate environment