Mark Suarez of Euro Pacific Capital on Wednesday stamped the Nasdaq-listed stock with a “neutral” rating and lowered his price target to $3.50 from $4.75.
In a client briefing the forecaster said the move was fuelled by a dividend reduction and concerns that the company’s exposure to lacklustre day rates will rise in the near to medium-term.
Suarez noted Diana will be forced to re-charter four vessels this year and three in 2015, a timetable that is troubling to those who believe a rebound in the containership space is unlikely to materialise anytime soon.
“Considering the re-chartering of four vessels in 2014 and three more in 2015 (assuming earliest expiration dates), Diana is exposed to the risk of lower TCE rates over the next two years assuming a gradual recovery in the charter rate market,” he told investors Wednesday.
Suarez believes the 3,749-teu Cap Domingo (built 2001) and Cap Doukato(built 2002), which are earning over $22,000 per day a piece, are particularly vulnerable to what the analyst described as a “material reduction in rates” upon redelivery in late 2014 or early 2015.
In the hour leading up to the close shares of Diana Containership slipped 3.38% to $3.14. Yesterday, the stock plummeted 12.4% on the heels of its first quarter earnings report, a dip that Michael Webber of Wells Fargo Securities blamed on the 67% dividend cut.
