In the hour leading up to the close on Wall Street the Manhattan and Monaco-based product tanker operator’s New York-listed stock jumped 4.41% to $9.24 as trading volume doubled.
In addition to updates about the addition of chartered tonnage Scorpio used its first-quarter earnings release to announce plans to repurchase $100m worth of its own shares.
When contacted by TradeWinds equity analysts who track the company were quick to point out that the owner missed the consensus forecast, which is why many believe the spike was spurred by the buy-back scheme.
In a note to clients Omar Nokta of Global Hunter Securities reminded investors that the programme is in addition to an existing $20m authorisation first announced in 2010.
“The company has used up $18.9m of the initial buyback, of which $11m was spent over the past four weeks to buy 1.2 million shares at [approximately] $8.83 per share,” he added.
“We see Scorpio as an attractive investment, especially as shares are down 25% year-to-date, and thus feel that Scorpio is set to capture a good return on its investment. Based on management's track record, we expect it will be aggressive with its repurchase program.”
Nokta, and many of his peers, also pointed out that Scorpio has a strong balance sheet and is scheduled to accept delivery of 42 newbuildings by the end of this year.
“We believe investors have the opportunity to invest in a pure-play product tanker company with the best assets and at the same time will see growing earnings and cash flow, higher dividends and an aggressive share buyback,” he added before reiterating a “buy” rating and $14.00 price target.
