Arctic Securities has taken up coverage of Ardmore Shipping with a buy rating amid the suggestion is it set for further growth.
Analyst Andreas Wikborg placed an $11.0 per share target price on the New York-listed owner suggesting it is a “quality product on the discount shelf”.
“We believe Ardmore has an excellent platform to continue building a leading product tanker company, either through listed company M&As or through secondhand acquisitions,” the analyst said in a report today.
Cork-based Ardmore has a fleet of 27 tankers on the water following the takeover of Frontline’s MR fleet last year.
Wikborg notes the owner has $109.51m in cash and undrawn credit facilities at a time when the products market is in the early stages of a recovery,
“We expect a favourable supply/demand balance inducing stronger freight rates from 2018 and onwards,” the analyst said.
“An abating orderbook combined with strong demand and increased trading complexity will support product tanker earnings.”
Wikborg projects that Ardmore will post a loss of $0.2 per share in 2017, but will spring back to profit in 2018 with a gain of $0.9 per share, climbing to $1.3 per share the year after.
