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Seanergy Maritime: Outlook Is Positive but Shares Are Fairly Valued, Says Analyst
Stock Analysis & Ideas

Seanergy Maritime: Outlook Is Positive but Shares Are Fairly Valued, Says Analyst

Seanergy Maritime’s (SHIP) debt position is looking healthier.

The Capesize shipping company recently disclosed it has paid back the debt on one of its Capesize vessels, the M/V Lordship, which was due in 2023. By doing so, it has managed to reduce its debt by $21.6 million.

The earlier-than-expected payment means SHIP should save $1.3 million in interest rates for the rest of 2021, and for 2022-23, $1.8 million on average per year.

“As a result,” said Maxim analyst Tate Sullivan, “And taking into account our forecast for cash after SHIP completes an acquisition at the beginning of 2Q21, we now expect debt reduction of $43M in 2021, up from our previous $30M estimate, and $28M in 2022, up from $20M; this leads us to reduce our interest expense forecast for 2021 to $14.5M, from $15.4M, and in 2022 to $11.1M, from $13M.”

The latest developments are also reason enough for Sullivan to increase his book value per share estimates; these rise from $1.14 at the end of the first quarter (unchanged) to $1.17 by the end of the year, up from the previous $1.16, and from $1.19 to $1.21 in 2022.

The company also noted that the outlook for Capesize ships appears positive. Currently, shipping rates are “above historical levels,” which should result in a “favorable operating environment” for Capesize vessels.

With this in mind, Sullivan expects SHIP’s 2021 time charter equivalent (TCE) rate to reach $19,033, a 60% year-over-year increase. Given the potential for shipping rates’ volatility, the analyst anticipates a 2.9% drop for the TCE rate in 2022. Overall, however, Sullivan predicts “more stable shipping rates in the next couple of years compared to the last two years.”

As an illustration of the stable environment, Sullivan points out, the average for the Baltic Capesize Index quarter-to-date, is “virtually equal to the 4Q20 average.”

For now, Sullivan believes SHIP shares are trading at a fair price, and therefore, remains on the sidelines with a Hold rating, and no specific price target. (To watch Sullivan’s track record, click here)

Only one other analyst has been keeping a tab on SHIP’s developments, also suggesting a Hold, providing Seanergy with a Hold consensus rating. (See SHIP stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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