Analysts ratcheted down their outlook for Ardmore Shipping’s earnings and stock price but remained undeterred in their positive outlook for the products tanker owner.
Investment banks Stifel and JP Morgan both reduced their earnings-per-share (EPS) estimates for the New York-listed company today as a result of lower expectations for medium-range (MR) tanker rates.
JP Morgan analyst Noah Parquette cut 8.1% from his EPS estimate for the full year, which he now expects to come in at $0.68 as a result of Ardmore’s revised guidance. And he reduced his 2017 estimate by $0.02 to EPS of $0.62.
But he said near-term headwinds in the MR market, including product stockpiles and weaker refinery margins, present a buying opportunity for investors.
“Medium-term, we believe product tankers remain the most attractive segment of shipping and see the recent selloff as a very attractive entry point,” he wrote in a note to clients.
Stifel analyst Benjamin Nolan chopped his 2016 EPS estimate by 11.7% to $0.91. And he now expects Ardmore to earn $1.67 per share next year, a 5.6% decrease.
He also chopped his price target for Ardmore’s shares to $14 from $16, though he still calls the company a “buy”.
“Given the lack of newbuilds placed in the year with 2016 on pace to see record low ordering, we estimate Ardmore could benefit from a much improved product market in 2017 and 2018,” he said.
The analysts’ readjustments came after the New York-listed shipowner reported a better-than-expected second-quarter profit.
As TradeWinds reported earlier today, the Anthony Gurnee-led company reported a profit of $5.5m in the second quarter, down from $7.9m in the same period of 2015.
Adjusted EPS of $0.18 was higher than the $0.13 average estimate of analysts.
Ardmore’s shares jumped 8.4% after the earnings report, reaching $7.53 in late-afternoon trading.
