UPDATE: Wells Fargo Starts DHT Holdings (DHT) at Market Perform
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(Updated - September 26, 2016 9:40 AM EDT)
Wells Fargo initiated coverage on DHT Holdings (NYSE: DHT) with a Market Perform rating. Analyst Michael Webber said the softer market keeps him on the sidelines for now.
"We believe DHT’s positive (1) discounted valuation (0.75x NAV and 0.4x Mid-Cycle NAV), (2) solid corporate governance track record, and (3) passthrough dividend (8% 17E yield, 60% of Net Income) are balanced against its (1) more limited scale/liquidity ($398MM Market Cap, $12MM/daily trading volume), (2) sector-wide orderbook pressure (7% supply growth through 2017), and (3) the potential for softer global volumes amid inventory destocking and narrowing expectations around topline demand growth. We view DHT as a high quality avenue for tanker exposure given its clean/transparent structure and strong balance sheet (42% net debt/cap). We are introducing our valuation range of $5.00-$6.00/share (31% upside potential) based on 0.90-1.1x our NAV estimate of $5.57/share, as well as our 2016E and 2017E EPS of $0.91 and $0.51," said Webber.
Shares of DHT Holdings closed at $4.17 yesterday.
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