Equity analysts at Lazard Capital Markets and Cantor Fitzgerald have plugged Box Ships into their research rosters.
Paragon & Box Ships CEO, Michael Bodouroglou.Both US investment banks initiated coverage of Paragon Shipping’s New York-listed containership spinoff with a “buy” rating and set a price target above the $12.00 level outlined in the company’s April IPO.
“With a moderately leveraged balance sheet and an experienced management team, we suggest Box Ships is well-positioned to take advantage of opportunities to grow its fleet,” Cantor analyst Natash Boyden told clients Wednesday.
“After going through a difficult period in late 2008 through early 2010 as a result of a sharp downturn in global demand, partly due to the global recession, as well as a large orderbook and an oversupply of tonnage, the container shipping sector has undergone a significant, and what we believe is sustainable, rebound,” she added.
Lazard analyst Urs Dur highlighted similar points in his inaugural note, telling investors to keep an eye out for an equity issue as Box Ships pursues new acquisitions.
He said: “We feel that it is management’s intention to purchase container ships that have contracts to reasonable counterparties in a manner that will be accretive to free cash flow/share. As such transactions are completed, Box Ships would have the ability to raise its dividends, and such should accelerate the appreciation of the stock over time.”
The Greek owner’s expansion strategy is focused on mid-size containerships deployed on one to five year contracts and the company intends on funneling most of its cash flow back to investors, Dur noted.
As TradeWinds has reported, Box Ships was formed in 2010 as a subsidiary of bulker owner Paragon Shipping.
Both companies are led by chief executive Michael Bodouroglou, who controls approximately 30% of Box Ships' shares.
Its fleet consists of six modern containerships, each with an average 2.5 years, and are serving contracts with Maersk, CSAV and CMA CGM- the biggest and brightest stars in the boxship sector.
Dur noted: “While the top 25 owners control 58% of the market, there are many smaller owners that may want to trade assets. As well, the large owners may want to sell assets to Box Ships to manage their balance sheet assets and/or large owners may act as consolidators and could potentially acquire Box Ships in the future.”