Jefferies has improved its outlook on Danaos Corp a day after the Greek container ship owner found multiyear charters for 11 vessels.
John Coustas-led Danaos on Wednesday announced it had fixed the vessels for an average duration of 4.7 years that will add $870m to its revenue backlog, bringing it to $2.8bn.
The Athens-based owner also plans to sell two 20-year-old, 6,400-teu ships for $130m.
"[Danaos] now has at least 95% of days covered in 2022, 77% in 2023 and 57% in 2024, which provides significant downside protection should rates come off the current peak levels in the coming years," analyst Randy Giveans said in the note.
In a note to clients on Thursday, Jefferies raised its 2021 Ebitda forecast by 2% to $493m and its projection for 2022 by 15% to $739m. The US investment bank expects $763m in Ebitda for 2023.
Jefferies also elevated its earnings per share (EPS) estimates by 26.5% to $6.01 for this year's fourth quarter, 12% to $15.65 for 2022 and 41% to $30.30 for 2023.
The firm also noted that analyst consensus for the New York-listed company's EPS gained 11.4% to $15.31 for 2021, 8.5% to $22.90 for 2022 and 14.2% to $26.38.
Jefferies said it based 2022 estimates on expectations that Danaos will get $50,000 per day for available intermediate boxships and $35,000 per day for open feeder vessels.
In 2023, the firm expects Danaos to secure $35,000 per day for the intermediates and $25,000 per day for the feeders.
Jefferies also gave the higher outlook to account for Danaos receiving a late-December dividend of $2.50 for 20.6m shares it owns in Israeli liner operator ZIM Integrated Shipping Services.
"The containership market remains robust and the company's [Danaos] balance sheet is in stellar shape, providing substantial financial flexibility, Giveans wrote.
"We believe that the company is likely to increase its quarterly dividend and/or engage in share repurchases in the coming months."
Jefferies also lifted its price target on the Danaos stock to $110 from $95. and reiterated its buy rating on the shares.
"The containership market remains incredibly strong as freight rates continue to push record highs while average charter rates remain at a near-peak level and durations extend to multiple years," Giveans said.
"While we expect rates to eventually come off these record levels, we expect a strong market until at least 2024."