Cantor Fitzgerald Downgrades Omega Navigation Enterprises (ONAV) to Hold

April 23, 2009 9:14 AM EDT

Cantor Fitzgerald downgrades Omega Navigation Enterprises (Nasdaq: ONAV) from Buy to Hold. Price target lowered from $7 to $4.50.

Cantor analyst says, "High yield tanker companies typically trade at higher EV/EBITDA multiples than those that do not pay out high dividend yields, which we attribute mainly to the returns these stocks provide investors. We suggest that ONAV should trade at a premium to the peer group average, given the company's extremely young and modern fleet, 100% long-term time charter coverage, attractive profit sharing arrangements, and significant presence in the niche ice-class tanker segment. Due to increased economic uncertainty and a reduced oil demand outlook, we utilize a conservative EV/EBITDA multiple of 8.0x to value the company. Additionally, the high orderbook for the product tanker fleet, which could impact ONAV's profit sharing abilities, combine with the increasing risk of a global slowdown, warrants a more conservative valuation, in our opinion. Applying our 8.0x multiple to our new 2009 EBITDA estimate of $47 million results in our new $4.50 price target (from $7)."

Omega Navigation Enterprises, Inc. (Omega) is engaged in the ocean transportation services of dry cargo products, and crude and refined petroleum products. The Company owns and operates a fleet of six double hull Panamax product tankers and two Ice Class 1A double hull Handymax product tankers.

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