Analyst Ken Hoexter of Bank of America Securities reiterated a Hold rating on Scorpio Tankers (STNG – Research Report), with a price target of $68.00.
Ken Hoexter has given his Hold rating due to a combination of factors influencing the product tanker industry and Scorpio Tankers’ position within it. He acknowledges that the product tanker time-charter equivalent (TCE) rates are robust and likely to remain high into 2024, which has led him to increase Scorpio Tankers’ earnings per share estimates for the fourth quarter of 2023 and the full year of 2024. However, despite the improved rates view and higher TCE targets due to vessel fluidity challenges, such as limited daily transits in the Panama Canal and persistent issues in the Red Sea/Suez Canal, he maintains a cautious stance.
The Neutral rating also reflects the mixed outlook due to factors such as the stability of product tanker transits through the Suez Canal, despite some disruptions in the Red Sea. While there is potential for longer sailing days and lower vessel capacity to drive up clean tanker rates, the report suggests that these upsides are balanced by concerns over the industry’s increasing orderbook ratio and unpredictable demand. Furthermore, Hoexter has increased the price objective to $68, factoring in the potential for rate strength and dividend growth, but remains wary of the aforementioned industry challenges.
According to TipRanks, Hoexter is a 4-star analyst with an average return of 3.3% and a 51.09% success rate. Hoexter covers the Industrials sector, focusing on stocks such as FedEx, Norfolk Southern, and Saia.
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Scorpio Tankers (STNG) Company Description:
Scorpio Tankers, Inc. engages in the provision of marine transportation of petroleum products. It operates through the following segments: Handymax, MR, LR1/Panamax, and LR2/Aframax. The company was founded by Emanuele A. Lauro on July 1, 2009 and is headquartered in Monaco.
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