Teekay Tankers (Buy, TP: USD80.00) - Solid earnings outlook
The Red Sea disruption has lifted rates far above their 5-year average and fuelled steep asset appreciation, especially for Teekay’s fleet (15-year-old values up c140% versus 5-year-olds up c70% since 2022). Still, the stock is trading at a P/NAV 0.89x versus its 5-year average of c0.65x, supported by what we expect to be substantial cash flow of cUSD4/share (potential 22% yield) on today’s TC rates. Positive demand effects and a still-low orderbook-to-fleet ratio of c10% should continue to support rates and cash flow. We reiterate our BUY and have raised our target price to USD80 (74).
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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