BTIG sees challenging year for drybulk stocks, downgrades three

BTIG downgraded Eagle Bulk Shipping (EGLE), Golden Ocean (GOGL) and Genco Shipping (GNK) to Neutral from Buy. While spot cape rates are in the $30,000 range, this looks to be more a function of dislocations in the Atlantic basin which has done little to help Supramax rates which are in the $13,000 range, the analyst tells investors in a research note. Looking ahead, with iron ore and coal demand expected to be flat to up and total seaborne drybulk trade growth expected to slow to 1%-2% from 4%-5% in 2023, 2024 is shaping up to be a challenging year for drybulk stocks, contends BTIG. The firm calls the stocks “value traps for now.” While the shares appear cheap on a net asset value basis, cash flow yields look set to drop roughly 500 basis points in 2024, says the firm.