Market Overview

Morgan Stanley: DHT Holdings Is A Play On An Oil Tanker Recovery

Share:
Morgan Stanley: DHT Holdings Is A Play On An Oil Tanker Recovery
Related DHT
Wells Fargo: OPEC's Production Increase Will Benefit Tanker Stocks
Benzinga's Top Upgrades, Downgrades For April 20, 2018

Oil tanker company DHT Holdings Inc (NYSE: DHT) is trading at a discount to its net asset value, and investors may want to consider taking advantage of the "attractive entry point," according to Morgan Stanley.

The Analyst

Morgan Stanley's Fotis Giannakoulis upgraded DHT Holdings' stock rating from Equal-weight to Overweight with an unchanged $5 price target.

The Thesis

DHT Holdings boasts a "highly attractive" very large crude carrier fleet, Giannakoulis said in the upgrade note. (See the analyst's track record here.) 

DHT's balance sheet gives it enough flexibility to satisfy its debt load of $5.50 per share without the risk of dilution, the analyst said. As the market continues to move in the direction of a recovery, the stock could re-rate significantly higher and trade in-line with the total value of its assets, which is $5 per share, according to Morgan Stanley. 

DHT could be considered one of the "strongest" companies in the sector in terms of its ability to navigate any oil downturn, Giannakoulis said. The company is backed by $130 million of liquidity, which represents around 26 percent of its total market cap, and a "modest" leverage, with net debt at 60 percent of fleet value.

Investors can expect the oil tanker market to recover due to the following factors, Giannakoulis said:

  • Higher OPEC output.
  • A ramp in U.S. exports.
  • Oil is trading in contango, which should increase trading activity.
  • Higher scrapping due to new IMO regulations.

Price Action

Shares of DHT Holdings were up 3.88 percent at $3.75 at the close Monday. 

Related Links:

This Energy ETF Should Get A Tax Reform Boost

Here Are Jefferies' Top 13 Tanker Picks For 2018

Latest Ratings for DHT

DateFirmActionFromTo
Nov 2018Morgan StanleyMaintainsOverweightOverweight
Nov 2018Wells FargoMaintainsOutperformOutperform
Oct 2018JP MorganUpgradesOverweight

View More Analyst Ratings for DHT
View the Latest Analyst Ratings

Posted-In: Fotis Giannakoulis Morgan Stanley Oil Oil ShippingAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

 

Related Articles (DHT)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
XECImperial CapitalDowngrades35.0
SSTIImperial CapitalUpgrades49.0
AVDLoop CapitalUpgrades29.0
FCREYDeutsche BankUpgrades0.0
OECUBSUpgrades34.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Analyst: California Resources' $750M Joint Venture, Equity Deal Could Create 'Significant Future Value'

CDC Still Recommends Sanofi, GlaxoSmithKline Vaccines As Flu-Related Deaths Rise