DBS Vickers upgraded container shipping firm Neptune Orient Lines to hold from fully valued and raised its target price to $1.23 from $1.00, citing a stabilising outlook.
NOL shares were down 2.1% at $1.15 on Friday. The stock has gained around 2% so far this year versus the nearly 15% gain in the broader Straits Times Index.
NOL results are set to improve in the second quarter, driven by higher freight rates, lower bunker fuel prices and cost-saving initiatives, DBS said, though it warned that the risk of a gradual decline in rates remains amid benign demand currently.
“The unfavourable containership demand-supply mismatch continues to pressure rates, but we are looking for a gradual slide downwards in 2H12 (the second half of 2012) at worst, unlike the sharp fall last year,” DBS said.
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