Maxim Group has lifted its view of Eagle Bulk on further strengthening of drybulk fundamentals.
Analyst James Jang upgraded the company's shares to buy from hold on forecast growth of global ton-mile demand through 2018.
He increased the price target for the US-listed bulker player to $7.50 from $6, expecting the tightening drybulk supply/demand fundamentals to spur further asset value appreciation.
"We have witnessed premiums of up to 7% paid for quality secondhand tonnage from current values as market fundamentals are favoring the drybulk sector," he wrote in a note to clients.
Based on expected higher spot rates, Eagle is expected to pull in revenue of $298m through 2019, up from previous guidance of $274.8m.
Drybulk recovery 'well underway'
Maxim foresees "further strengthening" for a drybulk recovery and expect changing trade patterns to bolster supply/demand fundamentals through year end.
"Near-term, we expect the dry weather in Europe and the Black Sea region to limit wheat production, which could be replaced by imports from the US," Jang wrote.
"Furthermore, we expect ton-mile expansion for key grain crops into the Far East due to the ongoing U.S.-EU/US-China trade dispute."
