Goldman Sachs Downgrades Frontline Ltd. (FRO) to Sell

Goldman Sachs downgraded Frontline Ltd. (NYSE: FRO) from Neutral to Sell with a 12-month price target of Nkr33 (from Nkr29), implying 17% downside.

The firm said the recent share price move is unjustified in light of the weak fundamental outlook for crude tanker rates and asset values. They shares now trade at a 17% premium to its 2012E net asset value, although they don't expect it to produce returns above its costs of capital over the next three years.

Fundamentals might not improve until mid 2014, when the company's fleet will be 18 years old on average compared to the market average of 9 years and average useful economic life of 20-25 years.

For an analyst ratings summary and ratings history on Frontline Ltd. click here. For more ratings news on Frontline Ltd. click here.

Shares of Frontline Ltd. closed at $6.81 yesterday.

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