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Even after the Fall, Most Analysts Are Positive on DHT Holdings

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Impact on stock price

JPMorgan Chase has downgraded DHT Holdings (DHT), and Jefferies has also lowered its target price for the company. It’s important to be aware of analysts’ recommendations, as they can significantly impact a company’s stock price. Changes to popular analysts’ views can cause significant short-term movement in a stock’s price.

More importantly, investors should track analyst recommendations to gauge analysts’ views on companies and to gauge their potential futures. Along with many other companies, we’ve seen this in the case of DHT Holdings. The company’s stock price fell 6.7% after Jefferies lowered its target price to $8 from the previous $11.

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Analyst recommendations

JPMorgan Chase has downgraded DHT Holdings to a “neutral,” but other analysts have remained positive on the company. According to Bloomberg, 88% of analysts tracking DHT Holdings (DHT) have given the stock a “buy” recommendation, while others have given it a “hold” rating. None of the analysts have given it a “sell” rating.

Reasons for the downgrade

JPMorgan has also downgraded a few other crude (DBO) tanker stocks. JPMorgan analyst Noah Parquette stated, “While we expect 2016 rates to remain relatively strong, we are significantly lowering our 2017-19 rate assumptions for crude tankers due to our new view on the supply/demand balance as 1) vessel deliveries accelerate, 2) demand growth slows (global crude production), 3) crude inventory drawdown occurs, and 4) vessel efficiency improves.”

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Target price

DHT Holdings’ consensus 12-month target price is $10.1, which indicates a 76.6% return potential. DNB market has the highest target price of $12.5 for DHT, followed by Seaport Global Securities with a target price of $12. Morgan Stanley, Jefferies, and Fearnley Securities have the lowest target price of $8.

Peer comparison

Analysts’ 12-month target prices for DHT Holdings’ peers are as follows:

  • Teekay Tankers (TNK): $9.07 with 99.3% return potential
  • Tsakos Energy Navigation (TNP): $12.83 with a return potential of 125%
  • Nordic American Tanker (NAT): $15.6 with a return potential of 13.8%
  • Euronav (EURN): $17.5 with a return potential of 65.4%
  • Frontline (FRO): $3.04 with a return potential of 39.4%
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