Dahlman Rose Downgrades Frontline Ltd. (FRO) to Sell
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Price: $23.10 +1.01%
Rating Summary:
5 Buy, 9 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 17
Rating Summary:
5 Buy, 9 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 17
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Dahlman Rose downgraded Frontline Ltd. (NYSE: FRO) from Hold to Sell with a price target of $3.50.
Dahlman analyst says, "We are reducing Frontline to Sell due to its heavy spot exposure, which we assess at roughly 85% for 2012, and heavy debt burden. With an operating cash flow breakeven of $19,400/day versus our expected fleet-wide earnings of $21,600/day, Frontline is very close to operating in the red on both an income and cash flow basis. We expect Frontline to report 3Q11 EPS of ($0.64) versus ($0.30) during 2Q11 and project 2012 EPS at ($1.61). Based on our forecasts, Frontline is expected to generate $110MM of EBITDA next year versus its net debt of $1.1Bn, implying a net debt/EBITDA multiple of 10.0x. This is above typical bank thresholds of 6.0x, and thus we expect Frontline will seek new, likely dilutive capital in order to stay in good standing with its lenders. We are targeting $3.50, based on our end-2012 NAV."
For more ratings news on Frontline Ltd. click here and for the rating history of Frontline Ltd. click here.
Shares of Frontline Ltd. closed at $4.42 yesterday.
Dahlman analyst says, "We are reducing Frontline to Sell due to its heavy spot exposure, which we assess at roughly 85% for 2012, and heavy debt burden. With an operating cash flow breakeven of $19,400/day versus our expected fleet-wide earnings of $21,600/day, Frontline is very close to operating in the red on both an income and cash flow basis. We expect Frontline to report 3Q11 EPS of ($0.64) versus ($0.30) during 2Q11 and project 2012 EPS at ($1.61). Based on our forecasts, Frontline is expected to generate $110MM of EBITDA next year versus its net debt of $1.1Bn, implying a net debt/EBITDA multiple of 10.0x. This is above typical bank thresholds of 6.0x, and thus we expect Frontline will seek new, likely dilutive capital in order to stay in good standing with its lenders. We are targeting $3.50, based on our end-2012 NAV."
For more ratings news on Frontline Ltd. click here and for the rating history of Frontline Ltd. click here.
Shares of Frontline Ltd. closed at $4.42 yesterday.
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