Weak Tanker Market To Impact GMR’s Near-Term Earnings

Analysts at Dahlman Rose & Co reiterate their “hold” rating on General Maritime

. The target price for GMR is set to $12. General Maritime reported its Q2 loss higher than the estimates and the consensus. According to Dahlman Rose, “The tanker market has been under pressure during the past several weeks, which is typical for this time of year due in part to the near-conclusion of the US summer driving season. This compares to 1H10 averages of $50,000/day. We note however that during the 4Q10/1Q11 winter season, global oil demand is expected at 0.7 mb/ d higher than 2Q10/3Q10 levels. As a result we expect a jump in VLCC demand as OPEC is likely to boost output to meet this seasonal strength, which should benefit tanker rates as we approach 4Q10.” “The company closed on its 5-VLCC/2-Suezmax acquisition from Metrostar and took delivery of the first VLCC earlier this month. Two more vessels deliver in August, three during 4Q10 and one in April 2011. We believe the purchase of these vessels was well-timed as we look for a much stronger tanker market during the next 18 months. With such upside leverage, we believe GMR shares are compelling,” the analysts say.