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.
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.