Analyst Ken Hoexter of Bank of America Securities reiterated a Buy rating on Scorpio Tankers, reducing the price target to $67.00.
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Ken Hoexter has given his Buy rating due to a combination of factors influencing Scorpio Tankers’ market position and future prospects. One significant consideration is the potential resolution of the conflict in Ukraine, which could lead to the gradual lifting of sanctions against Russia. This scenario might result in an influx of capacity from previously sanctioned tankers, affecting the market dynamics. However, Scorpio Tankers anticipates that many of these older vessels will face challenges re-entering the market, which could stabilize rates for certain tanker categories.
Additionally, while there has been an increase in Red Sea transits following a ceasefire, the impact on the product tanker market is expected to be minimal. The company’s strategic focus on ensuring safety and its anticipation of only slight rate changes in specific segments support a positive outlook. Despite lowering the price objective to $67, the Buy rating is maintained due to the company’s balanced approach to increasing rates and cash generation against the backdrop of peak rates and rising capacity.