Avance Gas is back in Cleaves' good graces.
Sort of.
A week after downgrading the Oslo-traded gas carrier owner to sell, the bank's Joakim Hannisdahl said the 20% drop in share price was enough to bump it back up to buy.
"With our target price unchanged at NOK 22 [$2.46], our only motivation for the upgrade is the lower share price," Hannisdahl wrote.
"We still see short term fundamental headwinds ahead, but nevertheless find the share attractive at current levels."
Last Wednesday, Cleaves downgraded Avance after its second quarter time charter equivalent revenue fell well short of its forecast — $34m instead of $46m — and charter rates came in at $30,860 per day instead of the expected $39,864.
The downgrade came "in light of recent share performance and lowered target price".
Since falling to sell, Avance shares slid from NOK 22.68 to NOK 19.12 on Thursday.
Shares had previously risen 35% after Cleaves released its shipping quarterly in July.
Despite the upgrade, Hannisdahl said there was near-term downside risk to VLGC spot rates as the sector heads into a cyclical low period.
"We believe the share could be range bound between NOK 16 and 24 until the second quarter of 2021 before potentially posting massive gains by 2023," he wrote.
The expected seasonal weakness, usually running from September until April, also prompted Cleaves to downgrade fellow Oslo-traded gas player BW LPG and New York-listed Dorian LPG to sell.
BW LPG shares closed down 3.19% to NOK 36.72 on Thursday.
In midday trading, Dorian shares were down $0.08 to $8.06.
