Shares in Tsakos Energy Navigation are too good to miss at a massive discount to net asset value, according to Fearnley Securities.
The investment bank has started coverage of the US-listed Greek tanker and LNG carrier company with a “buy” rating.
The target price for the share is $40, against a closing price of $19.58 in New York on Monday.
Analysts Oystein Vaagen and Fredrik Dybwad believe the “steep” discount to NAV is unjustified heading into a tanker up-cycle.
Priced at just 33% of NAV, the share is seen as a rare opportunity as many tanker owners are seeing their public values move close to underlying values.
The owner of more than 50 tankers and three LNG carriers has an estimated NAV of $59 per share, according to Fearnley Securities.
“While we acknowledge a slight discount is warranted, we believe current pricing is unsustainable considering current tanker fundamentals, and that pricing at some point has to come up,” the investment bank said.
The analysts point to a time charter coverage of 70%, removing earnings risk.
But this is not reflected in the share pricing, they argue.
The analysts also view debt levels as attractive and believe rising asset values are another reason to buy.
TEN will receive two new aframaxes in the first quarter of 2024, with suezmaxes and MRs following in 2025 and 2026.
Well-timed newbuildings
Fearnley Securities said this comes at a time of historically low orderbooks, where available slots are generally unavailable until 2027.
The analysts believe these ships are well-timed at a strong point in the market.
TEN saw business slow down in the three months to September.
Net income dropped at an annual pace of 39% in the third quarter to $31.2m.
This was the Nikolas Tsakos-led company’s lowest profit reading in six quarters.
Management said it was, nevertheless, pleased with the performance in the third quarter, which it described as a “traditionally cyclical low of the year”.
