Cantor Raises Price Target for DSX

Cantor Fitzgerald raised the price target for Diana Shipping (DSX) to $18 from $16 based on higher rechartering assumptions.  Cantors presently holds a ‘Buy’ rating on DSX.  DSX is one of the few shippers within the dry bulk space on which I hold a relatively constructive view.  Compared to other shippers the company has a healthy balance sheet, and is well position to take advantage of distressed asset prices.  In fact the company recently initiated a two year expansion program with its purchase of a new vessel.

Source: Bloomberg & Capital Link

Shipping rates over the near-term will likely remain volatile. Why? China.  China still holds a disproportional influence over shipping rates, and when a single player holds that much sway, volatility is inevitable, especially when that player is China. Therefore, anyone closely following the shipping sector needs to be very aware of what is happening in China. The secondary driver is of course a tug-of-war between a growing supply of ships and gradual increments in global demand for the service. Over the long-term, shipping rates should remain volatile through-out the year, but on average remain relatively subdued.