Safe Bulkers (SB) PT Raised to $2.50 at Jefferies After 4Q Beats and the Renewal Program Ramps

Jefferies analyst Randy Giveans raised the price target on Safe Bulkers (NYSE: SB) to $2.50 (from $1.75) after the company reported an adj. EPS of $0.04 which was above our estimate of $0.03 primarily due lower opex more than offsetting slightly lower revenues. The company announced it has agreed to purchase two Kamsarmax resales and one 2011-built Panamax, in addition to selling two older Panamax vessels as it continues its fleet renewal program. Additionally, SB announced it will redeem its outstanding Mezzanine Equity for $18.1 MM.

The analyst reiterated a Hold rating, stating "Dry Bulk Rates Remain Volatile but Showing Signs of Recovery. Dry bulk rates have been volatile to start 2021, with Capesize rates averaging $18,500/day, peaking at $26,500/day but hitting a trough of $10,250/day. Chinese iron ore demand and steel production remain robust, but Brazilian iron ore production has come in below expectations as Vale continues to experience seasonal supply issues and operational delays. Looking ahead, as a result of a very low orderbook and elevated scrapping, we expect dry bulk shipping rates to improve meaningfully in 2021 compared to 2020 as demand growth is expected across all dry bulk commodities".

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