Tuesday, FBR Capital Markets upgraded Overseas Shipholding Group Inc. (OSG) shares to Outperform from Market Perform and increased its price target to $48 from $35. The brokerage raised its 2010 per share estimate to profit $1.85 from loss $0.04, while introducing its 2011 EPS estimate of $4.50.
Analyst Robert MacKenzie said that his new price target of $48 is based on the historical median NTM P/CF multiple of 5x and $9.60 of estimated cash flow per share in 2011. The analyst raised 2010 EPS estimate primarily due to lower charter-hire expenses.
The analyst expects tanker rates to increase roughly 10% in 2010 and 20% in 2011. This equates to average VLCC rates of roughly $30 thousand and $37 thousand per day in 2010 and 2011, respectively.
The analyst upgraded the stock since he believes management has not only done an excellent job reducing costs, but also that the worst quarters are behind the company, which puts it in a favorable position to be opportunistic as distress begins to ripple through shipyards and over-leveraged owners.
Furthermore, the stock has meaningful upside to the analyst's target as investors start discounting 2011 and upside potential from any accretive transactions. Furthermore, the analyst has a much improved comfort level with the risks associated with potential late delivery for the FSO project, with that risk seemingly fully priced into the stock at this level.
Currently, OSG is up $0.26 or 0.68% and trading at $38.30.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.