Credit Suisse Starts Teekay Tankers (TNK) at Outperform

Credit Suisse initiates coverage on Teekay Tankers (NYSE: TNK) with a Outperform rating and a price target of $10.00.

Analyst G. Lewis commented, "Following the acquisition of the Princimar fleet, TNK is primed to ride this leg of the tanker up-cycle. We expect both crude and product tanker rates to push higher in 2016 up roughly 5-10% which should drive OCF of $2.46/share (35% OCF Yield). Our $10 target price is 6.5x our 2016 EBITDA estimate and a 40% premium to NAV. TNK acquired 12 Suezmax tankers from Principal Maritime, boosting its Suezmax fleet to 22 and its owned fleet by 50%. TNK is leveraged to the spot market with 90% of its 2016 days un-contracted. We estimate every $1,000 swing in charter rates translates to $15M in EBITDA or $0.10 EPS. TNK has ample flexibility to pay down debt and increase the dividend. We expect TNK to increase the dividend to $0.25 annually (~3-4% yield) which points to a ~10% payout of 2016 cash flow."

For an analyst ratings summary and ratings history on Teekay Tankers click here. For more ratings news on Teekay Tankers click here.

Shares of Teekay Tankers closed at $7.30 yesterday.

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