Shares of Costamare may gain traction in the coming weeks if rates connected to large containerships continue to climb, according to an equity analyst at Morgan Stanley.
Fotis Giannakoulis says a meaningful market rebound is on the horizon following a year-long decline that saw levels plummet by as much as 50% and believes the New York-listed owner could ride the rising tide as its fleet of boxships expands.
“The container charter market is at the turning point of a meaningful rate recovery driven by an improving global trade and strong US imports, recent capacity reductions across all major routes as liners’ profitability came under pressure and steep increases in liners’ freight rates,” he wrote in a note to clients.
While the analyst believes Costamare is relatively immune to short-term rate fluctuations as the majority of its vessels are tied to long-term contracts, he expects the stock will move higher as the boxship sector recovers.
“With the strongest balance sheet in the sector and the delivery of ten newbuildings approaching, Costamare offers a compelling growth story and an attractive 8.3% yield,” he said before reiterating an “overweight” rating and a $20.00 price target.
Shares of the owner, which is led by chief executive Constantinos Constantakopoulos and based in Athens where it oversees a fleet of 56 boxships with combined capacity of around 324,000 teu, climbed 5.69% before hitting $13.74 in the hours following the release Morgan Stanley’s report.