UPDATE: Stifel Upgrades Star Bulk Carriers; Announces Price Target
In their Thursday morning research summary, Stifel upgraded Star Bulk Carriers (NASDAQ: SBLK) from Hold to Buy and announced a price target of $18.
To start his summary of Star Bulk Carriers, Benjamin Nolan pointed out that although Star Bulk's adjusted earnings were slightly below his estimate ($0.07 vs. $0.08), it beat the Street consensus ($0.05).
Turning to a more macro view, Nolan looks to the recent decrease in iron ore prices to drive an expected ramp up in iron ore demand by Chinese steel producers. In terms of how this will affect Star Bulk Carriers, Nolan notes, "We believe the dry bulk market is on the cusp of a cyclical recovery. Specifically, we expect Capesize vessels to be the primary beneficiary as they are mainly used to transport iron ore to China. Given Star Bulk's large position in Capesize vessels and substantial operating and financial leverage, we believe the company should be ideally positioned to benefit from rate improvements."
Looking to the future, Nolan has reduced the estimate for 2015 EPS based on a need to raise equity due to high capital expenditures. However, he believes as capital expenditures decrease Star Bulk should be able to generate over $100 million of free cash flows by 2016.
At last check, Star Bulk was trading up just over four percent at $15.74
Latest Ratings for SBLK
|Aug 2016||Seaport Global||Assumes||Neutral|
|Jul 2016||JP Morgan||Upgrades||Neutral||Overweight|
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