Analysts Rate Euronav “Buy” as it Expands VLCC Leadership

Euronav tanker
Euronav is further expanding its leadership with VLCCs buying one new build and optioning a second (file photo)

Published Aug 16, 2023 3:01 PM by The Maritime Executive

Belgium-based tanker operator Euronav is continuing to lead the sector aggressively moving to expand its fleet and is being rewarded by investors. The company, which has been reporting strong financial results, reported plans for future fleet additions as two financial analysts called the stock a good investment and issued recommendations for Euronav’s stock.

The company is seen as being especially well positioned in the VLCC segment where it currently has a fleet of 41 owner and operated tankers. It also has 22 Suezmax tankers, but the VLCCs are seen as being a particular strength as the oil market rebounded in 2023. Analysts note that there have been few orders for new VLCCs and the current orders have long lead times providing good visibility on Euronav’s market position to 2026.

The company today reported that it is moving to further enhance its position by signing a deal to acquire one or possibly two new VLCCs. Euronav reported an agreement to purchase one VLCC newbuild along with a two-month option to acquire a second VLCC newbuild. The purchase will cost $112.2 million with “highly favorable payment terms and schedule,” according to the announcement. The first vessel is expected to be delivered in Q3 2026.

Euronav noted that the new vessels are in addition to one VLCC that is currently under construction at the Hyundai Samho yard in South Korea. It is the third ship in a class of VLCCs with the other two ships having already been delivered. They also have orders for four additional Suezmax tankers. In April 2022, Euronav purchased two eco-VLCCs, the Chelsea (299,995 dwt) and the Ghillie (297,750 dwt), for $179 million with the company highlighting it had reduced the average age of its fully-owned VLCC fleet to 6.6 years, making it amongst the youngest VLCC fleets globally.

J.P. Morgan analyst Samuel Bland initiated research coverage of Euronav on Tuesday saying that investors should buy the stock citing Euronav’s “overweight” position in the VLCC segment and the strong demand for tanker capacity. Bland said that the tanker market looked “upbeat for the near- and mid-term, with a combination of sharply improving profitability and limited new ordering.” 

At the beginning of the week, Cleaves Securities analyst Peter Christensen maintained his buy rating on Euronav. His August 13 report set a price target of $34.00.

News of the VLCC orders and strong ratings from the two analysts helped Euronav stock to open up 3.5 percent this morning to nearly $18 per share. The stock price is up 17 percent in the past month.