With chaos in the Red Sea, Scorpio Tankers (STNG) could see higher highs.
For one, with the chaos comes higher tanker rates, some of which are now above $100,000 a day, showing no signs of cooling.
Two, fears of a prolonged crisis could send tanker rates even higher in the near term. In fact, as noted by Seeking Alpha, “With over 85% of STNG’s vessels currently operating on the spot market, spot day rates for transporting refined products is the biggest driver for the stock.”
Analysts at Stifel just raised their price target on STNG to $76, with a buy rating. Bank of America also raised its price target to $72, with a neutral rating. The firm increased its 2024 EBITDA estimate 4% on increased fleet charter rates as Red Sea disruptions are lifting product tanker charter rates higher as ton-mile demand continues to scale, as noted by TheFly.com.
While STNG is becoming technically overbought, it could push even higher with day rates and the Red Sea crisis showing no signs of cooling off immediate term.
