Michael Webber of Wells Fargo Securitieson Monday upgraded New York-listed Diana, which trades under the ticker “DSX”,from “underperform” to “outperform” based on a bet that the dry-bulk market isgoing to improve in the months to come.
“Whilein the Chinese New Year lull, questions around Chinese fixed assetinvestment/liquidity, and a generally sluggish equity market may keep near-termupside potential constrained, we generally believe the dry bulk market shouldshow gradual year-on-year improvement,” he noted.
While Webber says other US-listedbulker owners like Genco Shipping & Trading (GNK) and Eagle Bulk Shipping (EGLE) are atrisk of bankruptcy or costly restructurings that can dilute or erase shareholdervalue he believes Diana will be able to avoid the fallout.
“While we tend to fall somewhere between themarket’s exuberance and management’s pessimism regarding a 2014/2015 dry bulkrecovery, we believe rates should be better year-on-year with DSX’s balancedcharter as well as its solid capital base providing a solid pathway for stablegrowth,” he added.
The researcher, who is based inManhattan, says he expects to see the Greek operator add between ten and 12 vesselsto its fleet of bulkers before the end of 2014, which would amount to growth ofapproximately 27%.
Despite Webber’s endorsement sharesof Diana slipped 2.21% in the hour leading up to the close and ended the day at$11.94. The dip may not come as a surprise since the stock, like many of itspeers, are often susceptible to volatility in the spot market.
Today, capesize, panamax andsupramax bulkers trading spot were seeing day rates of around $8,000, $10,600and $10,200 on average, respectively. According to Global Hunter Securities this representsa weekly decline of 20%, 6.2% and 11.3%, respectively.
