UBS on Dry Bulk Shipping: Cutting Estimates and Targets

UBS on Dry Bulk Shipping: Cutting Estimates and Targets

UBS analyst says, "Lowering dry bulk shipping estimates on unfavorable fundamentals - Since we last updated our forecasts for Eagle Bulk Shipping (Nasdaq: EGLE) and Paragon Shipping (Nasdaq: PRGN), dry bulk shipping industry fundamentals have softened further, with secondhand vessel prices and freight rates declining and no improvement in our negative outlook on the sector. The main culprit is overcapacity, as the amount of new supply hitting the water is grossly in excess of forecast demand growth. We see the outlook as difficult through 2012, with the emerging risk that fears of global macro weakness become reality."

"Our views on the stocks: Choppy seas ahead; stay on land for now - We maintain our Neutral ratings on EGLE and PRGN. Our caution is due to increased macro uncertainty, the likely long and volatile road to recovery in the overcapacity-fraught dry bulk shipping industry, and company-specific factors...we cut our EGLE and PRGN targets to $2 (prior $3.25) and $1.40 (prior $2.75), respectively."

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