Wells Fargo Starts Diana Containerships (DCIX) at Outperform, $8-$9 Valuation Range

Wells Fargo initiates coverage on shares of Diana Containerships (NASDAQ: DCIX) with an Outperform rating and $8-9 valuation range.

The firm believes that DCIX to make one or more vessel acquisitions in the 2,500-7,500 TEU range, following the completion of a $150 million credit facility. Wells forecasts that the company has ~$40 million in cash following its recent follow-on offering, purchases, and the repayment of all outstanding debt.

The container ship market remains solid as it continues to experience growth. The firm comments, "while DCIX has charter coverage of 100 percent and 91 percent for 2011 and 2012, respectively, it has an average charter length of approximately 1.7 years, well below the averages of 6-7 years for peers Seaspan Corporation (NYSE: SSW) and Costamare (NYSE: CMRE), and it will likely be active in the charter market both this year and next."

Wells Fargo's released its FY11 and FY12 EPS estimates at $0.34 and $0.40, and believes that the company will issue $0.55/share in dividends in 2012.

For more ratings news on Diana Containerships click here and for the rating history of Diana Containerships click here.

Shares of Diana Containerships closed at $6.76 yesterday.

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