UPDATE: UBS Starts Teekay Tankers (TNK) at Buy

(Updated - November 14, 2014 8:52 AM EST)

UBS initiated coverage on Teekay Tankers (NYSE: TNK) with a Buy rating and a price target of $5.50. Analyst Spiro M. Dounis noted value in its midsize tanker fleet.

"TNK offers investors exposure to both crude and product tanker markets—stronger tilt towards crude. TNK's fleet consists predominately of Suezmax and Aframax crude tankers; however, TNK is a growing its exposure to products via charter-ins. Given our positive outlook for both crude and products, we believe TNK is well positioned for a recovery in tanker rates," said Dounis.

"We estimate that 82% of TNK's fleet, including chartered-in vessels, will have some level of spot exposure in 2015. This is significantly greater than the fleet's spot exposure historically (44% in 2012). As a result, we expect TNK to outperform less spot exposed peers as tanker rates rise," he added. "In our view, TNK is well positioned to benefit from a recovery in tanker rates, especially given its significant spot exposure in 2015. We expect TNK's product fleet to benefit from increasing tonne-mile demand as refining capacity expands in regions further from consumers. On the crude side, TNK's mid-sized fleet is unlikely to participate in tonne-mile expansion; however, the low fleet growth should result in rate increases."

For an analyst ratings summary and ratings history on Teekay Tankers click here. For more ratings news on Teekay Tankers click here.

Shares of Teekay Tankers closed at $4.08 yesterday.

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