Shipping Industry Update (EGLE, GNK, NAT, OSG)

Analysts at Cantor Fitzgerald have released an update on the Shipping industry.

Analysts have upgraded Eagle Bulk Shipping Inc. (NASDAQ: EGLE) from Sell to a Hold rating. The price target has been raised from $4 to $5. The new price target is based on a multiple of 9x the EV/EBITDA for 2010. The 2010 forecast for EBITDA has been raised to $125 million from $102 million. While almost all of Eagle’s new vessel deliveries are secured under long-term charters, much of the existing fleet will be coming off charter in 2010.

According to analysts the company could benefit from Supramax rate environment. Analysts are optimistic about the long-term chartering strategy at Eagle and the niche in the Supramax sub sector. However the high level of debt is an area of concern according to analysts.

Analysts have meanwhile downgraded Genco Shipping & Trading Limited (NYSE: GNK) from Buy to a Hold rating. The price target for Genco has been lowered from $28 to $23. The new price target is based on a multiple of 6.5x the EV/EBITDA for 2010. Analysts have raised the EPS estimate for 4Q09 from $0.98 to $1.04 and expect Genco to report EPS and EBITDA of $3.77 and $285 million for 2010.

Analysts at Cantor estimate the 2011 EPS and EBITDA at $1.50 and $212 million respectively. Analysts believe that even though the company has an experienced management team and highly modern and diverse fleet, the stock is currently valued richly in relation to the charter-adjusted NAV estimate of $10.12 per share.

Nordic American Tanker Shipping Limited (NYSE: NAT) has been upgraded from Sell to a Hold rating by Cantor Fitzgerald. The price target for Nordic has been raised from $18 to $30. The price target is based on a multiple of 9x the EV/EBITDA for 2010. Analysts have revised the 2010 EBITDA estimates from $71 million to $131 million. Nordic has announced that it will sell 4 million shares in a follow on equity offering. The proceeds from the equity offering are expected to be used to acquire vessels.

Analysts believe that the company has a strong balance sheet and that the valuation fundamentals for the company do not support the current share price.

Overseas Shipholding Group Inc. (NYSE: OSG) has been upgraded from Sell to a Buy rating. The price target has been raised from $31 to $58 based on a multiple of 8.5x the EV/EBITDA for 2010. The EBITDA estimate for 2010 has been raised from $234 million to $297 million. Analysts estimate the 2011 EPS and EBITDA estimate at Overseas Shipholding to be at $3.34 and $359 million respectively.

Analysts believe that Overseas Shipholding can take advantage of any distressed opportunities arising from the current downturn as it has a strong balance sheet and diversified fleet profile. Analysts believe that with a high operating leverage the company can take advantage of a more robust tanker rate environment in 2010.