Imperial Capital Starts Frontline Ltd. (FRO) at Underperform, $1 Price Target

February 26, 2013 8:38 AM EST Send to a Friend
Get Alerts FRO Hot Sheet
Price: $1.22 -2.4%

Rating Summary:
    2 Buy, 8 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 8 | Down: 12 | New: 23
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Imperial Capital initiates coverage on Frontline Ltd. (NYSE: FRO) with a Underperform. PT $1.00.

The firm comments, "Although the recent financial restructuring has extended FROs runway, we believe crude tanker market fundamentals do not point to a near-term recovery and cash flow sweeps/profit sharing clauses inserted into the charter agreements in the 2011 restructuring eliminate much of the potential earnings upside through 2015. Additionally, we think the stock could face potential dilution in the event of another restructuring and/or as a result of addressing the maturity of the 4.5s. The stock currently trades in line with the comp average (13.9x 2013E EBITDA vs. 13.9x average for the peer group). Our $1.00 price target is based on a multiple of 13.9x our 2013E EBITDA of $85.6mn."

Separately, the firm is re-initiating coverage of Frontline with an Outperform rating on the $215mn 4.5% convertible senior notes due 4/14/15 (4.5s) at a recent price of 43.0 (52.32% YTM).

For an analyst ratings summary and ratings history on Frontline Ltd. click here. For more ratings news on Frontline Ltd. click here.

Shares of Frontline Ltd. closed at $2.05 yesterday.


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