Credit Suisse Increases Danaos Corp's Price Target

In a report published Tuesday, Credit Suisse analysts maintained a Neutral rating on

, while raising the price target from $6 to $7. Danaos reported its adjusted 1Q EPS at $0.28, ahead of analyst and consensus estimates. The company's net revenue from the quarter was $136 million, representing 3 percent y/y growth but a 1 percent sequential decline. The analysts expect the "trend to continue through 2016." A credit crisis and a weak containership market had washed away Danaos' earnings in 2010. "Over the last 4 years DAC restructured the balance sheet and waiting for its interest rate swaps to unwind. DAC looks to have finally turned the corner posting its best quarterly earnings since 3Q09. Earnings should improve," the analysts stated. Danaos needs to work on reducing its net debt to capital which currently stands at 78 percent. The analysts expect this level to drop "into the mid 60% range in the 2H16 (improving charter rates would help a little)." Panamax and sub-Panamax charter rates have climbed between 5 and 25 percent year-to-date, which "should help DAC re-charter its six ships up for renewal this year (two per quarter through 2015)." The EPS estimates for 2015 and 2016 have been raised from $1.10 to $1.20 and from $1.46 to $1.50, respectively.