Wells Fargo Downgrades DryShips (DRYS) to Market Perform, Cuts Numbers
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Price: $5.24 --0%
Rating Summary:
3 Buy, 5 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
3 Buy, 5 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Wells Fargo downgraded DryShips (NASDAQ: DRYS) from Outperform to Market Perform and lowered its valuation range from $3.25-$3.75 to $1.75-$2.00.
The firm comments, "We are downgrading shares of DRYS to Market Perform in the wake of additional credit issues, another quarterly miss, and the departure of its COO, as we believe it is becoming increasingly difficult to see a path for value recognition at DRYS. While we estimate DRYS' NAV at $3.52/share, stemming largely from the $3.96/share value of its ORIG stake, we believe uncertainty around $420MM in unfunded newbuild commitments (dry bulk and tanker), the soft operating environment, and a heavy management discount will likely keep shares trading at a fraction of that NAV. While DRYS has long suffered from a management discount, we had been of the opinion that it was overdone. As it stands amid the fallout from several questionable dry bulk/tanker investments and following the departure of COO Pankaj Khanna (who leant institutional credibility), we believe that discount looks more appropriate. We are lowering our valuationl range to $1.75-2.00, and lowering our 2012E and 2013E EPS to -$0.28 (from -$0.15) and -$0.06 (from $0.05) to reflect the Q3 results and revised revenue/expense ests."
For an analyst ratings summary and ratings history on DryShips click here. For more ratings news on DryShips click here.
Shares of DryShips closed at $1.70 yesterday.
The firm comments, "We are downgrading shares of DRYS to Market Perform in the wake of additional credit issues, another quarterly miss, and the departure of its COO, as we believe it is becoming increasingly difficult to see a path for value recognition at DRYS. While we estimate DRYS' NAV at $3.52/share, stemming largely from the $3.96/share value of its ORIG stake, we believe uncertainty around $420MM in unfunded newbuild commitments (dry bulk and tanker), the soft operating environment, and a heavy management discount will likely keep shares trading at a fraction of that NAV. While DRYS has long suffered from a management discount, we had been of the opinion that it was overdone. As it stands amid the fallout from several questionable dry bulk/tanker investments and following the departure of COO Pankaj Khanna (who leant institutional credibility), we believe that discount looks more appropriate. We are lowering our valuationl range to $1.75-2.00, and lowering our 2012E and 2013E EPS to -$0.28 (from -$0.15) and -$0.06 (from $0.05) to reflect the Q3 results and revised revenue/expense ests."
For an analyst ratings summary and ratings history on DryShips click here. For more ratings news on DryShips click here.
Shares of DryShips closed at $1.70 yesterday.
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