UPDATE: Stifel Upgrades Navios Maritime as 'Dry Bulk Market Regains Solid Footing'
In their Thursday morning research summary, Stifel upgraded Navios Maritime (NYSE: NM) from Hold to Buy and announced a price target of $14. Stifel analyst Benjamin Nolan notes this upgrade comes amid a "ramped up" demand in iron ore among Chinese steel producers due to recently decreased prices.
There are two main points highlighted by Nolan:
- Due to the increased demand in iron ore, the rates for Capesize vessels have more than doubled since the end of January to $19,269 as of yesterday. Nolan explained how this relates to Navios saying, " Navios Holdings has 17 Capesize vessels, of which six vessels have charters expiring in 2014 and another six vessels have been chartered in and operate in the spot market. This puts Navios Holdings at a distinct advantage and positions them as one of the most leveraged names to rising dry bulk rates among U.S. listed names".
Navios Holdings' EPS is expected to grow through 2016. Nolan outlined his estimates stating, "We estimate that if dry bulk spot rates increase by $10,000 per day, NM's earnings could grow by $1.19 per share in 2014, $1.90 per share in 2015, and $2.04 per share in 2016. However, if charter rates fail to materially increase, or the cyclical recovery is somewhat subdued, NM provides downside protection through its substantial positions in its subsidiaries".
At last check Navios was trading at $11.35 up 4.18 percent in the pre-market session.
© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.