Dorian LPG shares fell in New York on Thursday after the company released a trading update.
Shares in VLGC owners have dropped this year after rates collapsed this month.
Dorian LPG stock slumped as much as 6.4% yesterday to $39.75 per share, before rallying to close at $41.06.
The Connecticut-based company guided that the time charter equivalent revenues for its third quarter will be $161.3m to $163.3m, with the vessel utilisation rate at 93.6%, which was lower than analysts had estimated.
On Friday, DNB downgraded Dorian LPG to “hold” from “buy”, saying the stock has reached full valuation.
The bank changed the target price to $44 per share from $43.50.
DNB adjusted its estimates on declining VLGC markets, but still believes the third and fourth quarters “should remain strong”.
It sees total operating revenues of $162.3m for the third quarter, based on a fleet TCE of about $71,400 per day, leading to an adjusted Ebitda of $128.7m, which is 4% below consensus.
Dorian LPG will report full results for the third quarter on 1 February.
On Wednesday, Dorian LPG declared an extraordinary dividend of $1 per share. DNB expects the company to pay out “significant” dividends going forward.
Analyst Jorgen Lian said the latest dividend represents a “modest” 10% run-rate dividend yield but considering its earnings yield of about 18% for the next 12 months, the company should have “headroom” for an increase of the dividend per share.
DNB also cut the target prices for VLGC peers BW LPG and Avance Gas on Friday after the recent rates collapse, but it believes there is a possibility of rates rebounding
“We believe the latest outlook for warm weather could see inventories remain above the five-year average at the seasonal low point, which historically has meant above-average VLGC rates,” Lian said in a note.
“The arbitrage currently implies a $60,000/day rate, above current spot at [about] $32,000/day, and has recently started to trend upwards again.”
