In a report released yesterday, Ken Hoexter from Bank of America Securities reiterated a Hold rating on Scorpio Tankers (STNG – Research Report), with a price target of $72.00.
Ken Hoexter has given his Hold rating due to a combination of factors affecting Scorpio Tankers’ performance and market outlook. The company’s fourth quarter adjusted earnings per share were slightly below expectations, mainly due to lower-than-anticipated rates and a milder winter impacting tanker demand. However, following disruptions in the Red Sea, the company saw a substantial uptick in time-charter equivalent rates, with bookings significantly exceeding previous forecasts. Scorpio Tankers has also been successful in reducing its net debt, thereby lowering its cash breakeven point, and remains committed to further decreasing its debt levels before increasing shareholder returns.
The analyst’s reiteration of the $72 price objective is grounded in a conservative valuation approach, adjusting the company’s EV/EBITDA multiple to 5.0x from 6.0x for 2024 estimates. Nonetheless, the potential risks seem balanced by strong cash generation and a robust rate environment, prompting an increase in earnings per share estimates for the next two years. Despite this positive momentum, the rising product tanker orderbook-to-fleet ratio, which may lead to increased capacity, somewhat tempers the outlook and supports the decision to maintain a Hold rating rather than a more bullish position.
STNG’s price has also changed moderately for the past six months – from $50.020 to $66.260, which is a 32.47% increase.
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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.
Read More on STNG:
- Scorpio Tankers Inc. Announces Financial Results for the Fourth Quarter of 2023 and an Increase to its Quarterly Dividend
- STNG Earnings this Week: How Will it Perform?
- Scorpio Tankers price target raised to $86 from $85 at JPMorgan
- Scorpio Tankers Inc. Announces that on February 14, 2024 the Company will Issue Fourth Quarter 2023 Results and have a Conference Call
- Scorpio Tankers price target raised to $76 from $73 at Stifel
