Research firm BTIG downgraded three shipping stocks today, namely Eagle Bulk (EGLE), Genco Shipping & Trading (NYSE:GNK), and Golden Ocean (GOGL) from Buy to Neutral, citing expectations of a challenging year for drybulk stocks in 2024.
Analysts anticipate flat to slightly increased demand for iron ore and coal, with seaborne drybulk trade growth slowing to 1%-2% from the previous year.
“We note our 2024 forecast of Cape/Supramax rates at ~$18k/~$13k, which is roughly in-line with the freight futures curve, but 10%-20% below implied consensus freight rates,” analysts said.
“Our rate estimates take into account fleet growth of only 2%-3% which is below the long-term average of ~5%-6%.”
Rate weakness is expected to impact dividends, likely decreasing by around 500 basis points. The overall decrease in asset value may prompt some public companies to focus on fleet renewal and growth, potentially limiting cash available for shareholders.
Despite these challenges, owners with low net debt at 15%-40% of fleet value are expected to maintain balance-sheet flexibility even as rates moderate,” the analysts concluded.