JPMorgan has upgraded Costamare Inc CMRE shares from Neutral to an Overweight rating and lifted the target price from $12 to $13 on the stock implying over 70 percent upside potentials. The firm believes the dividend cut from $0.29 to $0.10 has removed the overhang hampering the stock movement.
Analyst Noah Parquette expects the company to generate stable cash flow in the current and next year with its focus on smaller vessel classes. The management's move to reduce dividend rate could also free up cash flow to improve liquidity. Furthermore, the analyst sees the need for cash requirement lower with the DRIP program and founding family's participation.
Although the dividend cut came in as a surprise, the brokerage admitted that the cut is sensible, improving the liquidity issue in the medium term. The firm expects cash requirements to be only $3 million for dividend compared to $22 million previously.
JPMorgan boosted its estimates following changes in dividend and new financings.
At last check, Costamare was up 1.78 percent at $7.45 on the day.
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