Sector Snap: Drybulk shippers rise on '09 optimism
Drybulk shipping stocks mostly rose Monday, as a key shipping index pulled back but several analysts reiterated their views that demand should remain strong through next year.
Dahlman Rose analyst Omar Nokta said activity in the sector slowed slightly Monday after robust traffic last week. He assured, however, that long-term fundamentals remain strong as steel prices remain at record levels and more long-term time charter contracts are signed. Lazard Capital Markets analyst Urs Dur predicted that drybulk vessel demand will outpace supply though the first-quarter of next year, when an increase in the number of ships will settle demand. Dur noted that new environmental standards should also weigh on the sector in 2010.
But Oppenheimer & Co. analyst Tim Tiberio suggested that the drybulk upswing might not last as long as some other analysts predict. Tiberio forecasts the sector's stocks will pull back in midsummer, then rebound again following the Olympics in Beijing.
He also downgraded shares of Navios Maritime Holdings Inc. to "Perform," or "Hold," saying the stock is currently too expensive to warrant an "Outperform" or "Buy" rating. Navios Maritime remains one of his top picks among drybulk stocks, however, because of its strong management, relatively low risk and growing South American and logistics operations.
The Baltic Dry Index, which measures drybulk shipping rates on 40 routes across the world, fell 17 points Monday to close at 10,220.
The index, which is managed by the Baltic Exchange in London, set an all-time high of 11,039 in November of last year. In afternoon trading, shares of DryShips Inc. jumped $3.92, or 4.3 percent, to $95.88, while Diana Shipping Inc. added $1.03, or 3.2 percent, to $33.61.
Excel Maritime Carriers Ltd. leaped $3.10, or 6.9 percent, to $48.25, and Genco Shipping & Trading Ltd. gained $5.03, or 6.7 percent, to $80.29. Euroseas Ltd. lost 54 cents, or 3.7 percent, to $14.04, while Navios Maritime Holdings Inc. slipped 5 cents to $13.59. Danaos Corp. rose a penny to $25.88, and Eagle Bulk Shipping Inc. gained 71 cents to $34.