HomeMarket NewsSmall CapsWhy Analysts Recommend Buying Nordic American Tankers for Global Crude Recovery

Why Analysts Recommend Buying Nordic American Tankers for Global Crude Recovery

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B. Riley Securities Analyst Reiterates Buy Rating

Liam Burke, an analyst at B. Riley Securities, has reiterated his Buy rating on Nordic American Tankers Limited (NAT) and raised the price target to $6 from $5.50.

Well-Positioned Fleet for Global Crude Recovery

Burke highlights that NAT’s concentrated fleet is well-positioned to benefit from the global recovery in crude oil consumption, which could result in an operating leverage upside.

Q2 Performance and Market Trends

In Q2, NAT reported a revenue of $67.80 million, slightly below the consensus estimate of $68.32 million. However, the company improved its earnings per share from a loss of $(0.02) in Q2 FY22 to $0.13. This fell slightly below the consensus estimate of $0.14.

Increased Revenue

The improvement in daily revenue per vessel is driven by expectations of higher year-over-year global crude oil consumption.

Strength in Suezmax Vessels Market

The analyst notes that Q2 benefited from a stronger market for Suezmax vessels due to the EU ban on Russian oil and production cuts from Saudi Arabia. The changing trade patterns have created opportunities for Nordic American Tankers.

Reduced Earnings Volatility

Nordic American Tankers has taken advantage of a solid spot rate environment to minimize earnings volatility by securing longer-term fixed-time charters for a percentage of its fleet.

Opportunities in Shifting Trade Patterns

With the expected filling of the Saudi supply gap by other Middle East producers, as well as increased production from the U.S., Brazil, and Mexico, trade patterns are shifting towards traditional markets for smaller crude carriers like Nordic American’s Suezmax vessels, which is anticipated to further increase overall crude vessel ton-mile demand.

Benefiting from Diversified Crude Sources

NAT’s Suezmax fleet has benefited from the EU sourcing crude from non-Russian producers, including Africa, the U.S., and Latin America. Additionally, increased production from Guyana is expected to drive up Suezmax rates.

Current Stock Performance

At the time of writing, NAT shares are trading at $4.1450, showing a 4.41% increase.

Source: Benzinga.com

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