New York investment bank Maxim Group has initiated coverage of Top Ships' shares with a buy rating and a $2.50 price target.
In a Monday morning note, Maxim analyst James Jang said the market "is undervaluing the company's earnings potential and the upside optionality of its young fleet".
He forecast the Evangelos Pistiolis-led tanker owner to start making money in the second half of the year.
"[Top Ships'] fleet of modern, eco-design vessels allows for easier employment and we are expecting the company to turn to profitability in [the second half of 2019], once all of its vessels are delivered and operating under its charter contracts," Jang wrote.
New York-listed Top Ships shares were up around a cent Monday to $0.71. The last time shares traded over $1 was late January.
The company fell out of compliance with Nasdaq's $1 minimum share price rule in mid-March and have until September to fix it.
Jang wrote that the Greek company's 100% charter coverage limited downside risk, but will limit upside when tanker rates rise. He predicts Top Ships will have $45.8m in net revenues by 2021, up from $41m last year, while hitting $0.05 earnings per share and $26.4m in Ebitda.
He noted that shares were trading at 6.7 times Maxim's 2019 Ebitda estimate versus the tanker sector average of 8.8 times Ebitda and target of 8.7 times.
