Dry Bulk Equities to Rebound Amid Fragile Earnings

Drewry Maritime Equity Research initiates coverage on the Dry Bulk sector with Scorpio Bulkers, D/S NORDEN, Diana Shipping, Navios Holdings and Pacific Basin.

Diana Shipping bulker

By MarEx 2015-01-20 20:05:52

In 2014, the value of equity market participants in listed Dry Bulk companies eroded massively, with many companies losing more than half of their market capitalization. At the start of 2014, the market expected earnings to improve on the back of recovery in underlying freight markets, but optimism soon turned to pessimism as the companies failed to meet expectations through the year. Drewry Maritime Equity Research (DMER) believes the depressed market could recover partly in 2015 and expects underlying earnings to improve marginally.

Devanshu Saluja and Rahul Kapoor, analysts at DMER stated, “We see a fragile earnings outlook for the Dry Bulk sector with an uptick in demand pushed late into the year. However, moderating supply growth should see better fundamentals emerge through 2015-16 and the improving supply-demand balance should see stock prices stage a modest rebound in 2015.”

DMER has rated Navios Maritime Holdings and D/S NORDEN as Attractive, while it classifies Scorpio Bulkers as a high-risk, high-reward proposition. DMER “Neutral” on Pacific Basin and Diana Shipping.

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