Posts Tagged ‘DryShips’

Cantor Upgrades DryShips (DRYS) To ‘Buy’ From ‘Hold’

January 25th, 2010 Michael McDonough Comments off

From Cantor Report:

Cantor/DRYS: We Upgrade DRYS To BUY (From HOLD) On Valuation, Rig Exposure

* We raise our price target to $8 (from $7) based on our 7.0x
EV/EBITDA multiple to our new 2010 EBITDA forecast of $558 million
(from $544 million). Given the discrepancy between our target and
the current stock price, we upgrade DRYS to a BUY (from HOLD). Our
price target is also supported by our charter-adjusted NAV of
$7.80 per share.

* With nearly all of its dry bulk fleet fixed under period charter
contracts, we suggest the primary upside catalyst for the stock
over the near-term will be securing employment and financing for
the 5th and 6th drilling rigs.

* We raise our 4Q:09 EPS estimate to $0.27 (from $0.26). For 2010,
we now look for DRYS to report EPS and EBITDA of $1.05 and $558
million (from $1.00 and $544 million), respectively. Finally, we
introduce our 2011 EPS and EBITDA forecasts of $1.22 and $743
million, respectively.

* Our new estimates are based upon our revised dry bulk rate
forecast (see “The Ship’s Log – 4Q:09 Review and 2010 Outlook”)
published concurrently with this note.

* Management has stated its intention of growing the dry bulk fleet
through potential distressed transactions over the near-term, with
a focus on the Panamax and, to a lesser extent, Capesize vessel
classes. However, we believe the primary focus will be on fixing
drilling rigs 5 and 6 under charter contracts, as those charters
will likely be necessary before bank financing can be secured.


Unusual Rally in DryShips (DRYS)

July 27th, 2009 Michael McDonough Comments off

I noticed an unusual rally in DryShips (DRYS) today, which closed up an astonishing 13.6%.  At first I attributed this advance to positive sentiment stemming from better than anticipated new home sales, coupled with speculation over the company’s earnings data and a higher BDI, but after looking at the performance of the rest of the sector, which was good, but not stellar, I began to wonder.

After a couple minutes of investigation I came across an article on Reuters titled  PREVIEW-Drybulk earnings to be mostly in line with expectations, in which Oppenheimer’s shipping analyst Scott Burk stated he believes DryShips (DRYS) and Excel Maritime (EXM) have the highest potential to exceed earnings estimates given the companies’ exposures to spot shipping rates. DRYS is now up 17.0% on a weekly basis. He also indicated that Diana Shipping would be the least likely to beat expectations.

Of course reaction to this piece probably led to its fair share of short covering and speculation toward Friday’s earnings release, but I at least feel confident that I found the catalyst for today’s move.  Given the motivation behind today’s rally it is unclear whether we can expect to see continued buying in DRYS tomorrow in advance of this week’s earning release.

Dry Bulk Shipping
Index 1D% 1W% 1M% 1Y% Weighting
DBSI 7.5% 10.6% 19.9% -55.6%
DSX 2.6% 2.8% 8.5% -47.1% 20%
DRYS 13.6% 17.0% 19.2% -90.3% 32%
EGLE 5.3% 16.4% 29.8% -78.1% 5%
EXM 5.2% 6.1% 39.2% -72.5% 8%
GNK 2.6% 7.6% 16.4% -57.8% 14%
NM 7.1% 4.3% 12.5% -47.2% 8%
PRGN 4.7% 3.2% 18.7% -70.6% 2%
SB 3.6% 7.9% 20.3% -55.3% 8%
SBLK 10.5% 9.9% 4.6% -59.4% 4%