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Diana Containerships (DCIX) PT Lowered at Wells Fargo After Co. Cuts Dividend

May 14, 2014 1:44 PM EDT
Get Alerts DCIX Hot Sheet
Price: $0.60 --0%

Rating Summary:
    2 Buy, 2 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 11 | Down: 12 | New: 43
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Wells Fargo maintained a Market Perform rating on Diana Containerships (NASDAQ: DCIX) and lowered its price target to $3-$4 (from $4-$5). Comments follow Q1 results and news it cut its dividend by 67%.

"DCIX posted adjusted Q1 EPS of $0.03, above consensus of $0.01 and our estimate of -$0.02, which took a back seat to the dividend cut, as DCIX trimmed its Q1 dividend to $0.05/share/quarter, representing a $0.10/share/quarter cut from the prior dividend ($0.15) level," said analyst Michael Webber. "The security of DCIX's dividend has long been a concern, with the roll-over risk of DCIX's acquired time-charters consistently casting a significant (and very valid) shadow over the payout."

"We had viewed the current dividend as sustainable through H2 (although not 2015), and while a dividend cut was somewhat expected (but not quite this early), we believe the dividend (~16%) and cheap optionality to a containership recovery had been the only rationale to own the stock, with yesterday's cut removing any near-term impetus to get involved. Management noted that it viewed a ~16% yield as a poor use of cash given a number of strategic options, however we do not believe the savings ($15MM annually) will be particularly meaningful (unless prompted by their lenders). While a sustainable European recovery remains the biggest variable for the container complex, it remains to be seen whether the improving European economy will fully translate to an improving container market, as fundamentals have remained weak throughout 2014 amid modest signs of a European recovery. We are revising our 2014 and 2015 EPS estimates to $0.07 (from -$0.03) and -$0.31 (from -$0.34) to reflect the Q1 results as well as revised revenue and expense assumptions and lowering our valuation range to $3-4 (from $4-5)," he added.

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 $3.25 yesterday.



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Analyst Comments, Analyst EPS View, Analyst PT Change, Dividends

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