Euronav, Scorpio Still Best-In-Breed Tankers: Credit Suisse

  • Tanker rates experienced extreme volatility in Q3, but finished the quarter on a high note.
  • With rates currently near $100k/d, Credit Suisse believes upward Q4 tanker earnings revisions are coming soon.
  • Credit Suisse names Euronav NV EURN and Scorpio Tankers Inc STNG as its top picks.

As Q4 kicks off, Credit Suisse analyst Gregory Lewis took a look back at a crazy Q3 for tanker stocks. In a new report, Lewis discusses what happened in Q3, what investors can expect in Q4 and which stocks are Credit Suisse’s top picks.

Volatile Q3

VLCC rates averaged about $50k/d in Q3, but the rate range for the quarter was huge. Rates peaked at about $80k/d in mid-July but dipped as low as about $20k/d in August. MR rates were equally volatile during the quarter.

Despite the volatility, average rates for the quarter were solid, with VLCC rates nearly flat quarter-over-quarter and MR rates up about 10 percent.

Strong Start To Q4

So far in Q4, VLCC rates have averaged about $80k/d and have recently moved close to $100k/d. According to Lewis, VLCC Q4 earnings typically double Q3 earnings over the past 15 years, a trend that he believes could easily continue this year.

“With spot rates at ~$100k and Q3 FFAs pointing to 80k/d we expect upward Q4 earnings revisions,” he explained.

Stock Picks

Credit Suisse names Euronav and Scorpio as its top two tanker stock picks. The firm is projecting a 23 percent operating cash flow yield from Euronav in 2015 and a 20 percent yield from Scorpio.

Credit Suisse also has Outperform ratings on Tsaskos Energy Navigation Ltd. TNP and Navios Maritime Midstream Partners LP NAP.

Disclosure: the author holds no position in the stocks mentioned.

Loading...
Loading...
STNG Logo
STNGScorpio Tankers Inc
$44.300.48%

Stock Score Locked: Edge Members Only

Benzinga Rankings give you vital metrics on any stock – anytime.

Unlock Rankings
Edge Rankings
Momentum
17.14
Growth
74.87
Quality
78.80
Value
92.20
Price Trend
Short
Medium
Long
Market News and Data brought to you by Benzinga APIs
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm

Comments
Loading...