Evercore slashes GASS

A leading equity analyst has downgraded shares of StealthGas, a Greek LPG-carrier operator led by chief executive Harry Vafias.
StealthGas chief executive Harry Vafias at the Nasdaq stock exchange

Shares of StealthGas, which is led by Harry Vafias, slid by 2.98% to $9.94 in midday trading.

Jonathan Chappell of Evercore Partners on Monday slapped the Nasdaq-quoted stock with an “equal-weight” rating and lowered his price target to $11.00 from $12.00.

In a note to clients the researcher pointed out that the company pre-announced earnings of $0.12 to $0.13 per share for the second-quarter of 2014, which is well below the range that many Wall Street forecasters had expected for this period.

While StealthGas watched earnings per share (EPS) more than double in 2012 Chappell reminded investors that the bottom line has declined year-over-year ever since.

“Although StealthGas has made several changes to its fleet, vessel employment, and capital structure over the last month that should improve its long-term prospects, we believe the absence of near-term EPS growth momentum will render the shares range-bound,” he continued.

While Chappell believes growth with resume in the third-quarter of 2014 he argued that full-year earnings before interest, taxes, depreciation and amortization (Ebitda) is likely to be lower than the figure reported in 2013 and said his 2015 EPS estimate is now “more tempered” as well.

The analyst acknowledged some of the declines seen in recent quarters are the result of follow-on equity offerings that helped the owner raise cash for fleet expansion but fears the stock is going to “languish”, which is based on a bet that near-term results will “continue to disappoint” in the months ahead.

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