Scorpio Tankers (Buy, TP: USD82.00) - Undervalued cash flow potential
Despite being down versus the strength during much of 2024, product tanker rates remain solid, with MR rates currently 7% above the February 5-year average (112% excluding 2023–2024). We forecast FCF yields of 22% and 29% for 2025 and 2026, respectively, which, together with Scorpio Tanker’s discount to NAV (0.66x P/NAV), in our view should be supportive for continued accretive share buybacks. Hence, we reiterate our BUY but have lowered our target price to USD82 (93).
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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