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Credit Suisse On Safe Bulkers: 'Not Getting Any Better'

SB | July 29, 2016

Credit Suisse has downgraded Safe Bulkers, Inc. (NYSE: SB) to Underperform from Neutral as it expects prolonged weakness in the drybulk market.

"Management has done a tremendous job of working with its banks to refinance ~$470 million which helps extend SB's runway, but at a certain point the market still needs to recover. That is the problem," analyst Gregory Lewis wrote in a note.

Safe Bulkers reported a second-quarter loss of $0.15 a share versus consensus estimate of a loss of $0.16 and CS loss estimate of $0.18. Net revenue fell 7 percent to $26 million (CS estimate: $24 million). EBITDA margin was 34 percent (TTM 31 percent), driven by aggressive vessel cost cutting.

Lewis narrowed his 2016 loss estimate to $0.67 from $0.70 to account for the second-quarter earnings beat, but widened his 2017 loss estimate to $0.44 from $0.36 reflecting expectations of weak market environment.

Shares of Safe Bulkers closed Thursday's regular trading session at $1.11. Lewis maintained his target price of $1.

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