Shares in John Fredriksen’s Frontline dropped as much as 13% after its third-quarter report.
Shares are now down about 40% since a peak in May.
Analysts said the results were lower than expected and also see estimates for the fourth quarter coming down on the back of the tanker owner’s market rates outlook.
DNB Markets analyst Jorgen Lian said in a note: “Q3 was marginally behind expectations, impacting the dividend of $0.34 per share for a 7% run-rate yield.
“However, consensus expectations remain elevated for Q4 despite soft freight markets, and we see considerable downside risk to estimates unless there is a dramatic improvement towards quarter-end.”
John Fredriksen-backed Frontline said 77% of fourth-quarter days were booked at $44,300 for VLCCs.
Suezmaxes have been fixed at $39,600, for 70% of days and LR2s/aframaxes at $34,800 for 60% of days.
Lian said bookings were “decent” compared to peers.
DNB saw VLCC rates in the fourth quarter of $50,300 per day, suezmaxes at $42,900 per day and LR2s at 33,100 per day.
Lian said: “Based on current spot rates and adjusting for ballast days at the end of the quarter, guidance would imply Q4 Ebitda near $200m (consensus at $305m).”
“In sum, we see potential for about 9% downside to consensus FY24 Ebitda, but believe recent share price weakness already reflects most of the downside to estimates and see the shares down 3% to 5% today also reflecting a catch up to the implied 3% downside to US close yesterday,” he added.
Arctic Securities said: “Incorporating current market rates on open days leaves us with an estimated Q4 Ebitda of $230m to $240m.”
The investment bank’s current Ebitda estimate is $314.4m.
“Thus, we expect estimates to come down significantly following today’s report,” analyst Kristoffer Barth Skeie said.
