Ship Finance International (SFL) PT Lowered to $10 at BTIG

BTIG analyst Gregory Lewis lowered the price target on Ship Finance International (NYSE: SFL) to $10.00 (from $12.00) while maintaining a Buy rating.

The analyst commented: "SFL reported Q2 earnings (BMO) with adj. EBITDA of ~$104M (includes ~$8M of associated income) coming ~7% above consensus of ~$97M. EBITDA was down ~10% sequentially (~21% Y-Y) as the Hercules drilling rig remains warm stacked and some vessels entered scheduled drydock (management expects fewer drydockings in 2H25). An operating EPS loss of $0.01 (excludes ~$4M gain on vessel sales) was above consensus' -$0.05 estimate. Turning to the dividend, employment opportunities for the Hercules have continued to push right while a handful of bulkers and containerships are being redelivered to their owners, leading SFL to cut its dividend by ~26% to $0.20 which represents a ~45% payout of operating cash flow (OCF) and implies a ~9% annualized yield. We note the new dividend points to a 40%-50% payout of our FY26 OCF estimate. Turning to the portfolio, SFL sold three ~15-year-old Supras in Q2 for ~$45M with the last vessel delivering later this quarter. Q3 also saw SFL deliver eight Capes (~15 year average age) to Golden Ocean (GOGL, Not Rated) for ~$115 following GOGL's exercise of purchase options. SFL also redelivered six containerships to MSC (Private) during Q2 under a chartering agreement, with an additional vessel delivering after the end of the quarter. Bottom line: Vessel redeliveries and a soft drilling market are weighing on near-term cash flows, leading SFL to trim its dividend for now. We maintain our Buy rating.'

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