Wells Fargo Downgrades Diana Containerships (DCIX) to Market Perform
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Price: $0.60 --0%
Rating Summary:
2 Buy, 2 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 13
Rating Summary:
2 Buy, 2 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 13
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Wells Fargo downgraded Diana Containerships (NASDAQ: DCIX) from Outperform to Market Perform and lowered its valuation range from $8-$9 to $5-$6.
"We are downgrading DCIX shares to Market Perform from Outperform, along with our other remaining Outperform-rated Container stocks, as we take a more cautious stance towards the space," analyst Michael Webber notes. "While the majority of our container coverage has rallied year to date (up 21% on average ex-DCIX, vs. S&P 500, up 12%), DCIX has lagged (down 25%, although its dividend brings its total return up to -20%), amid questions around its long-term dividend sustainability, and most recently due to headwinds from its recent ATM equity offering (which we believe is being quickly executed). While it certainly pains us to move to the sidelines at current levels (especially at a 26% yield, which we think will still be paid over the next 1-2 quarters), we believe weak current Containership fundamentals and a softening outlook will likely pressure the entire group. We expect DCIX to use the proceeds from its most recent capital raises ($90MM - both debt and an ATM offering) to source additional fleet growth and should it be necessary, potentially support its $1.20/share annual dividend on a short-term basis."
He added, "DCIX effectively continues to play a game of chicken in our view, between a potential Containership recovery and its ability to organically support its dividend. While DCIX may find a way to sustain it via cash flow supportive (charter attached) acquisitions, given a difficult H2 outlook we are moving to the sidelines for now."
For an analyst ratings summary and ratings history on Diana Containerships click here. For more ratings news on Diana Containerships click here.
Shares of Diana Containerships closed at $4.54 yesterday.
"We are downgrading DCIX shares to Market Perform from Outperform, along with our other remaining Outperform-rated Container stocks, as we take a more cautious stance towards the space," analyst Michael Webber notes. "While the majority of our container coverage has rallied year to date (up 21% on average ex-DCIX, vs. S&P 500, up 12%), DCIX has lagged (down 25%, although its dividend brings its total return up to -20%), amid questions around its long-term dividend sustainability, and most recently due to headwinds from its recent ATM equity offering (which we believe is being quickly executed). While it certainly pains us to move to the sidelines at current levels (especially at a 26% yield, which we think will still be paid over the next 1-2 quarters), we believe weak current Containership fundamentals and a softening outlook will likely pressure the entire group. We expect DCIX to use the proceeds from its most recent capital raises ($90MM - both debt and an ATM offering) to source additional fleet growth and should it be necessary, potentially support its $1.20/share annual dividend on a short-term basis."
He added, "DCIX effectively continues to play a game of chicken in our view, between a potential Containership recovery and its ability to organically support its dividend. While DCIX may find a way to sustain it via cash flow supportive (charter attached) acquisitions, given a difficult H2 outlook we are moving to the sidelines for now."
For an analyst ratings summary and ratings history on Diana Containerships click here. For more ratings news on Diana Containerships click here.
Shares of Diana Containerships closed at $4.54 yesterday.
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