Dahlman Rose Downgrades Overseas Shipholding Group (OSG) to Sell

Dahlman Rose downgraded Overseas Shipholding Group (NYSE: OSG) from Hold to Sell with a price target of $9.00.

Dahlman analyst says, "We are reducing our rating on OSG to Sell due to its high spot exposure, which is at 90% for 2012, along with its high level of debt. We estimate its vessels will earn on average $19,200/day, which is below our projected cash flow breakeven of $20,700/day. Accordingly we expect OSG will tap into its cash reserves in order to meet its CAPEX, debt repayment and dividend. While the company recently cut its dividend in half from $1.75 to $0.875 per share, we believe there is further downside. OSG ended 2Q11 with $204MM of cash, but we expect that to drop below $10MM by the end of 3Q12 if the market does not improve. While it has successfully entered into a new forward start $900MM credit facility, at attractive terms, we still believe OSG will need to raise fresh capital in order to allow for a cushion. We forecast 3Q11 EPS at ($1.73) and 2012 EPS at ($6.25)."

For more ratings news on Overseas Shipholding Group click here and for the rating history of Overseas Shipholding Group click here.

Shares of Overseas Shipholding Group closed at $13.70 yesterday.

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