DNB Markets has raised its forecasts for LNG carriers suggesting the sector is the most attractive in shipping today.
Analysts led by Nicolay Dyvik believe improved rates will turn spot trading vessels cash-flow positive in 2019, which should drive up stock prices in a peer group which has struggled during the past year.
This has led to an upgrade for Peter Livanos company GasLog and a rise in target prices for other leading names.
DNB Markets projects tri-fuel vessels will earn $54,000 per day in 2019, which will see a return of normal seasonal patterns, up only modestly from its earlier guidance.
However, its 2020 forecast has swelled from $66,000 per day to $73,000 per day, with the bank projecting a period where demand will grow roughly three times faster than supply.
Dyvik has raised GasLog from hold to buy, noting the company’s stock is down by 22% in the year to date.
His target price has been raised to $19.9 per share, with an FSRU contract award for the Alexandroupolis project in Greece identified as a near-term catalyst.
DNB’s top pick Flex LNG and Golar LNG were assigned higher target prices of $18.8 and $43 per share respectively given the brighter outlook.
Golar LNG Partners was cut from hold to sell, with DNB suggesting the MLP’s annual distribution it set to be cut from $2.3 to $1 per share.
Dyvik says the FRSU market is set to trough in 2019. “It will take time for the FSRU market to improve but we expect patient investors to be rewarded in Hoegh Holdings,” he said.
