FBR Capital Upgrades Overseas Shipholding Group (OSG) to Outperform

November 3, 2009 7:25 AM EST

FBR Capital upgrades Overseas Shipholding Group (NYSE: OSG) from Market Perform to Outperform. Price target increased from $35 to $48.

FBR analyst says, "We are upgrading OSG since we believe management has not only done an excellent job reducing costs, but also that the worst quarters are behind the company, which puts it in a favorable position to be opportunistic as distress begins to ripple through shipyards and over-leveraged owners. Furthermore, the stock has meaningful upside to our target as investors start discounting 2011 and upside potential from any accretive transactions. Furthermore, we have a much improved comfort level with the risks associated with potential late delivery for the FSO project, with that risk seemingly fully priced into the stock at this level...We are raising our 2010 EPS estimate to $1.85 from ($0.04), primarily due to lower charter-hire expenses. We are also introducing our 2011 EPS estimate of $4.50. We expect tanker rates to increase roughly 10% in 2010 and 20% in 2011. This equates to average VLCC rates of roughly $30,000 and $37,000 per day in 2010 and 2011, respectively."

To see more analyst ratings on OSG Click Here.

Overseas Shipholding Group, Inc., a bulk shipping company, engages primarily in the ocean transportation of crude oil and petroleum products.

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