Michael Webber reduced his rating on the Nasdaq-quoted tanker and bulker owner to “market perform” from “outperform” citing credit issues, another quarterly earnings miss and the recent departure of operations chief Pankaj Khanna.
“While we estimate DryShips' net asset value (NAV) at $3.52 per share, stemming largely from the $3.96 per share value of its Ocean Rig stake, we believe uncertainty around $420m in unfunded newbuild commitments, the soft operating environment, and a heavy management discount will likely keep shares trading at a fraction of that NAV,” he told clients.
“While it has long suffered from a management discount, we had been of the opinion that it was overdone. As it stands amid the fallout from several questionable dry bulk and tanker investments and following the departure of COO Pankaj Khanna (who leant institutional credibility), we believe that discount looks more appropriate.”
Webber said eight bulker and two tankers remain unfunded and noted the George Economou-led company has postponed deliveries on several of these vessel and is seeking additional delays, discounts and/or seller financing in an effort to ease the burden.
The Athens-based shipowner, which recently told investors it would rather walk away from these commitments than sell shares of its offshore spinoff at current levels, watched its stock slip 0.59% to $1.69 in early trading.
