Deutsche Bank Tweaks Estimates on Diana Shipping (DSX) But Remains Bullish

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Deutsche Bank is reaffirming its Buy rating and $13 price target on shares of Diana Shipping (NYSE: DSX) following the release of the company's Q3 results.

The firm notes the earnings upside was due to $1.2 million more than expected in total sales. Deutsche comments that based on its strong balance sheet and ability to grow in a weak market, they believe shares currently offer a solid risk/reward ratio.

Management also announced plans to extend its $100 million buyback plan for an additional year. The plan was originally scheduled to be terminated at years end.

An analyst at Deutsche reports, "DSX maintains a fortress-like balance sheet, with a net cash position and over $500 million of dry powder for acquisitions. While we may or may not be at the absolute trough of the cycle, we believe we are close enough to a bottom for vessel acquisitions to become highly attractive long-term investments. However, owners will need to have sufficient long-term liquidity to cover near-term earnings volatility. Given DSX’s time charter coverage of 100% in 2011 and 74% in 2012, low leverage and cash position, near-term rate volatility should not be a threat for the company. We believe DSX will take advantage of weak vessel values over the next twelve months to expand its fleet and we are buyers of DSX ahead of the potential fleet growth."

The firm is tweaking its FY11 and FY12 EPS estimates from $1.30 and $0.84 to $1.32 and $0.78.

For an analyst ratings summary and ratings history on Diana Shipping click here. For more ratings news on Diana Shipping click here.

Shares of Diana Shipping closed at $7.25 yesterday, with a 52 week range of $6.59-$13.74.

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