Genco May Gain as Shipping Rates Rally, According to JPMorgan

Genco Shipping & Trading Ltd. may rise as much as 20 percent in the current quarter in New York trading, JPMorgan Chase & Co. said, citing expectations for a recovery in freight rates.

Genco may lead gains among haulers of dry-bulk cargoes because the stock is at the low end of a trading range, analysts Jonathan Chappell and Darren Hicks said in a note to clients today. The Baltic Dry Index, a measure of commodity freight costs, has been under “immense pressure” because of reduced coal shipments from Australia and fleet expansion, they said.
“We would look for Genco to recover to closer to its resistance levels, providing appreciation of 15 to 20 percent,” Chappell and Hicks said, adding that their technical analysis suggests the stock may be “bottoming.” The Baltic Dry Index may rebound once production resumes at Australian coal mines shut by floods, they said.
Genco closed at $14.71 yesterday, giving the New York-based company a market value of $522.6 million. The stock has traded as high as $18.08 and as low as $13.88 since the end of June, and a rebound in freight rates may push the shares toward the upper end of that range, the analysts said. JPMorgan has an “overweight” rating on the stock.
Genco’s ships haul dry-bulk commodities including grains and coal, the company’s website shows.