UPDATE: BTIG Starts Diana Shipping (DSX) at Buy, $5 PT
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BTIG analyst Gregory Lewis initiates coverage on Diana Shipping (NYSE: DSX) with a Buy rating and a price target of $5.00.
The analyst commented, "We initiate coverage of Diana Shipping with a Buy rating and a $5 PT. We view the current stock price as an attractive entry point on the heels of the company’s recently completed stock tender ($2.50/share) where DSX purchased $15M of stock (~7% of outstanding shares). DSX has had a tough few years on the back of a weak freight market which has seen the balance sheet stretched and the fleet age. And while modern ships typically outperform over a cycle, during a market recovery (what we expect over the next two years, older ships (roughly 50% of DSXs fleet is 10+ years old) tend to outperform. We note while modern vessel prices are up 5%-10% YTD, 10+-year-old tonnage prices are up 15%-20%. Bottom line: we expect management to use the on-going market recovery to continue to strengthen the balance sheet (net debt dropped ~10% in 2020) and renew the fleet. Our $5 PT points to roughly a 20% premium to NAV; however, given our expectation of an improving rate market, we expect asset prices to move higher in 2021."
Shares of Diana Shipping closed at $2.61 yesterday.
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