Evercore ISI upgraded shares of Capital Product Partners on expectations that a more optimistic outlook for the tanker market next year should lift the clean products sector first.
Analyst Jonathan Chappell raised his rating on the Nasdaq-listed containership and tanker owner to "buy" from "hold" as he held up products carrier-focused rivals Ardmore Shipping and Scorpio Tankers as his top picks.
Chappell said the chance for outperformance by tanker stocks may be limited in the near term as the sector feels the impact of the Opec production cut and inventory withdrawals.
"We certainly are not bullish about tanker market prospects for 2017," he said.
But the analyst said positive momentum for rates should come in 2018 as newbuilding deliveries slow and trade flows normalise.
"We believe demand growth will outpace that of supply next year, driving rates up across all asset classes, with the largest increases coming in the product tanker markets," he said.
Earlier today, Evangelos Marinakis-backed Capital Product announced 6.7% increase in its dividend, bringing the quarterly payout to $0.08 per share.
The company's shares are up 3.8% so far today, hitting $3.48 in afternoon trading.
