Star Bulk Target Bobs Up
We are continuing our Hold on Star Bulk Carriers Corp., but raising our target price to $5.
In 2009"s first quarter, SBLK posted diluted EPS before nonoperating items of $7.96 million, or $0.13 per diluted share, well below our $0.27 estimate due to lower-than-expected revenues.
An average of 12.0 vessels were owned and operated for 1,037 voyage days during the quarter, earning an average adjusted time charter equivalent, or TCE, rate of $35,158 per day. This compares to 8.1 vessels owned and operated for 647 voyage days during the prior-year quarter, earning an average TCE rate of $35,767 per day.
We are cutting our 2009 diluted EPS estimate to $0.45 from $0.87 due to the first quarter shortfall, as well as a substantial reduction in our revenue estimate. Positively, the company has a significant portion of its fleet under contract?100% of operating days in 2009, 71% in 2010, and 42% in 2011.
SBLK suspended its dividend and share repurchase program, in conjunction with the amendment of loan agreements to waive certain loan covenants until February 2010. Moreover, SBLK filed a registration statement earlier this year for $250 million in securities to provide operating flexibility.
The company"s balance sheet looks solid, with relatively low leverage and a current cash position of $72 million versus upcoming 2009 debt maturities of $36 million.