Its analysts opted for the positive rating despite the belief the Peter Georgiopoulos-led company will not feel the full benefit of the market peak given the number of vessels that will deliver in 2016.
In a report entitled joining the tanker party, analysts Jan Andreas Naess, Joakim Hannisdahl and Jonathan Staubo placed a $19 per share target price on the company, suggesting the stock will react positively to the winter market.
“We have high expectations for the winter market, where we believe that we may see rates reaching levels well above $100,000 per day,” the analysts wrote.
“We also have strong expectations for the first half of 2016, before we may see a slowdown toward the second half due to a high influx of newbuildings.”
Fearnleys expects Gener8 to log a pre-tax profit of $163m in 2015 and a further gain of $118m next year.
Looking longer term, the analysts believe the build-up of storage capacity in China will prove to be a positive factor.
“Over the next two to three years around 150m barrels of capacity is likely to be added by independent storage projects, with some 20-30m barrels to be filled within the next two quarters,” they explained.
“We expect this capacity to be rapidly filled given the current low oil prices, which will only add to demand for crude tankers, and VLCCs in particular.”
