UPDATE: Credit Suisse Initiates Coverage on Nordic American Offshore Ltd. with Outperform Rating, $22 PT as New Kid on the Block

In a report published Monday, Credit Suisse analyst Gregory Lewis initiated coverage on

with an Outperform rating and $22.00 price target. In the report, Credit Suisse noted, “Unlike existing public OSV companies, NAO's focus is to return all cash flow from operations as dividends, hence the 9% yield. (OSV competitors are yielding ~2%.) The OSV market is cyclical; hence, maintaining low leverage is key to NAO's strategy. Another key to the strategy is growth. NAO plans to grow organically and through acquisition (think small private players); however, as NAO pays out its cash as dividends, we expect fleet growth to be driven by equity raises. As long as NAO trades above NAV (we estimate ~$14), issuing equity would be accretive to NAV, assuming it buys boats at fair market value. More importantly, new boats would drive the dividend higher.” Nordic American Offshore Ltd. closed on Thursday at $18.80.