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Nordic American Tankers (NYSE:NAT) +2.9% and Teekay Tankers (NYSE:TNK) +2.1% in Thursday’s trading as Jefferies sees the two companies as top beneficiaries from surging mid-size tanker rates on higher Atlantic Basin cargo volumes, raising their respective stock price targets to $5.50 from $5 and to $58 from $54 previously.
Suezmax and Aframax crude tanker spot rates have surged from an average $27K/day during Q3 to ~$70K currently, highlighting a tight supply/demand balance and elevated risk premium with wars ongoing in Israel and Ukraine, Jefferies analyst Omar Nokta noted.
Nordic American Tankers (NAT) and Teekay Tankers (TNK) are the two niche mid-size tanker plays, with Nordic focused solely on Suezmaxes while Teekay operates Suezmaxes, Aframaxes and LR2s.
Nokta projected Teekay (TNK) will generate $139M of EBITDA during Q4, above his prior $100M estimate and $105M analyst consensus. while seeing Nordic American (NAT) generating $58M of EBITDA in Q4, up from his previous $43M outlook and $51M consensus.
Nokta also forecast Q4 earnings of $3.31/share for Teekay (TNK) and $0.19/share for Nordic American (NAT), above respective consensus of $2.05 and $0.13.
Frontline (FRO) also would benefit from its Suezmax and LR2 exposure, but consensus EPS remains too high at $0.63 vs. Nokta’s updated estimate of $0.49, the analyst said.
