Euronav Pay Day Better Than Expected, Citi Says

In a report published Thursday, Citi analysts maintained a Buy rating on

, while raising the price target from $13.50 to $19, after the company announced a new dividend policy that "targets an 80% payout on net income." The analysts estimate that the payout represents a 9.6 percent yield on Euronav's current share price, "providing strong return of capital potential in an improving rate environment." Although management had already expressed their intension and the dividend announcement was not a surprise, the magnitude is higher than expected. The payout, when coupled with a better-than-anticipated rate environment, "pushes the prospective dividend yield solidly above our and investor expectations," the report mentioned. Moreover, day rates for both VLCCs and Suezmaxes were significantly higher than what Citi had expected for the quarter, "adding upside via a more accelerated rate recovery than expected." "That said, while we maintain a view for continued elevated rates through 2017, we expect rate recovery to assume a more moderated pace through the remainder of 2015, while still indicating robust growth," the analysts added.