JPMorgan says buy Scorpio Tankers, sees oil tanker stock rallying more than 40% on strong earnings
There's a buying opportunity in shares of Scorpio Tankers , according to JPMorgan. Analyst Samuel Bland initiated the oil tanker operator with an overweight rating, saying it has a rosy outlook ahead. "The group is undergoing a sharp inflection in prospects, moving from weak earnings and overleverage to strong earnings and rapid deleveraging, with a current [free cash flow] yield of c.30%," Bland wrote in a Wednesday note.
mountain Scorpio Tankers shares YTD Bland expects that strong demand for seaborne trade for oil products will continue, even as supply and capacity remains at a record low. Meanwhile, sanctions around Russian exports could add to the oil tankers' ton-miles, as in the volume and distance of products shipped. "The orderbook / fleet is at a record low level of 5-6%, with a realistic prospect that the fleet may shrink in the mid-term.
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