
Top marks for TEN
A leading US investment bank has initiated research coverage of Greek tanker operator Tsakos Energy Navigation.
Michael Webber of Wells Fargo Securities stamped the owner’s New York-quoted stock with an “outperform” rating and set a valuation range of $9.00 to $10.00 per share.
“Tsakos owns a fleet of 62 tankers (42 crude, 16 product, two shuttle tankers, and two LNG carriers), which provides exposure to what we believe will be a gradually firming tanker market in the second-half of 2014/2015,” he told clients Monday.
“Further, Tsakos' discounted valuation (about 0.9x net asset value), and its growing stable of long-term, MLP-friendly contracts adds a meaningful degree of positive optionality for the stock.”
Webber believes the possibility of an MLP became “more realistic” for Tsakos after it firmed up a strategic alliance with Statoil and argued that an MLP will “continue to play a larger role” in the Athens-based operator’s valuation going forward.
“Tsakos has more than $1bn of MLP-friendly assets either on-the-water, or on order, which could form the basis for an MLP,” the equity analyst explained.
“We think an MLP could eventually be worth an incremental $7.00 per share for Tsakos, and while we do not expect Tsakos to turn into GasLog overnight, we do believe that an MLP spin could separate it from its C-corp comp set, turning its historical discount into a systemic premium.”