Euroseas' share price has taken a nice leap after the boxship owner fixed a vessel at almost three times the going spot rate.
The New York-listed company on Thursday put the 1,740-teu EM Hydra (built 2005) on a charter lasting anywhere from 23 months to 25 months at $20,000 per day.
The voyage, which is set to begin in the second-half of May, is expected to earn at least $13.8m in revenue for Euroseas and boost operating profit by $9m.
Containerships are currently earning about $7,000 per day on average on benchmark routes such as China to US as the sector struggles to keep up with demand.
A few weeks ago, Aristides Pittas-led Euroseas fixed 1,723-teu Joanna (built 1999) at $16,800 per day.
Noble Capital Markets analyst Poe Fratt could not put his finger on the share leap in which shares rose to $21.71 from $17.37 on Thursday morning before closing at $19.91 on Monday.
Shares rose another $0.52 to $20.43 in after-hours trading.
He was quite bullish on Euroseas, however, on Friday following the Hydra fixture.
Noble increased its 2021 operating profit estimate to $37.5m from $35.4m based on "positive impact" of the Hydra charter and time-charter equivalent (TCE) rates expected to improve $400 per day to $16,200 per day.
"Solid contract cover and upside potential with other contracts are set to renew at higher rates," he wrote.
He said the Hydra charter boosted the forward cover to 84% of 2021 available days booked at average rates of $14,900 per day, up from 79% of 2021 available days booked at average rates of $14,600 per day.
"Since the container market has been stronger than expected, there is still some upside potential to our current 2021 Ebitda estimate," he wrote.
'Upside'
"Marking up all of the remaining 500 open available days by $5,000 per day represents upside in the $3m range."
He also reaffirmed Noble's positive outlook for the entire boxship sector.
"Container supply-demand fundamentals appear favourable. More charters have been signed with longer terms and at higher TCE rates, and the year has started on a better-than-expected note," Fratt added.
"The order book and supply growth remain historically low due to shipyard restrictions, regulatory uncertainty and declining capital availability, while demand should rebound on the back of unprecedented global stimulus and solid secular trends.
"As a result, demand growth could outstrip supply growth this year."
Noble maintained a market perform rating on Euroseas shares due to strong stock price performance.
"While the container market outlook is favourable and new charters have been positive, we believe that the risk-reward profile is balanced after a 206% gain this year," he wrote.
