Market Overview

Morgan Stanley: Eagle Bulk Offers 'Attractive Entry Point' To Recovering Shipping Sector

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Morgan Stanley: Eagle Bulk Offers 'Attractive Entry Point' To Recovering Shipping Sector

It’s been a wild few years for maritime shipping stocks, but one Wall Street analyst said Eagle Bulk Shipping Inc. (NASDAQ: EGLE) may finally have settled into a reasonable valuation.

The Analyst

Morgan Stanley analyst Fotis Giannakoulis initiated coverage of Eagle Bulk with an Equal-Weight rating and $6.50 price target.

The Thesis

The dry bulk market turned profitable in 2018 after a devastating multiyear downturn, Giannakoulis said in the initiation note. (See the analyst's track record here.)

Eagle Bulk stock was hammered during the weak cycle, losing more than 96 percent of its market cap over the past three years, the analyst said. 

Rising shipping rates, modest fleet growth and 3.9-percent global economic growth have created a favorable environment for shippers, Giannakoulis said. As long as economic growth outpaces fleet size growth of around 2.5 percent annually, rates will likely continue to march higher, he said. 

Eagle Bulk underwent an aggressive restructuring back in 2014 that wiped out almost $1 billion in debt, and Giannakoulis said management has done an exceptional job of managing the balance sheet since that time.

“The company’s strong leverage position and balance sheet, coupled with the stock trading below its $6.5/share NAV, offer an attractive entry point to a strengthening market."

Morgan Stanley is being conservative at this point until rates make new highs, Giannakoulis said, but the analyst forecast that Eagle Bulk stock could reach $9 per share if Supramax rates eventually hit $15kpd.

Price Action

Eagle Bulk stock was up 2.6 percent at the time of publication Monday at $5.85.  

Related Links:

What's The Deal With Dry Bulk Shipping Stocks And Reverse Splits?

A Dry Bulk Shipping ETF Sets Sail

Latest Ratings for EGLE

DateFirmActionFromTo
Sep 2019Initiates Coverage OnBuy
Oct 2018Initiates Coverage OnBuy
Jul 2018UpgradesHoldBuy

View More Analyst Ratings for EGLE
View the Latest Analyst Ratings

Posted-In: Fotis Giannakoulis Morgan StanleyAnalyst Color Price Target Initiation Analyst Ratings Best of Benzinga

 

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