Diana Shipping, Safe Bulkers, Golden Ocean all cut at Jefferies

Sep. 26, 2022 2:57 PM ETDiana Shipping Inc. (DSX), SB, GOGLEGLE, SBLK, GNKBy: Carl Surran, SA News Editor17 Comments

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Diana Shipping (NYSE:DSX) -6.7%, Safe Bulkers (NYSE:SB) -5.8% and Golden Ocean (NASDAQ:GOGL) -6.7% in Monday's trading after Jefferies downgraded the dry bulk carriers to Hold from Buy to reflect the decline in dry bulk charter rates.

The sector has enjoyed mostly strong earnings since early 2021 but has come under pressure recently due to softer demand for iron ore and steel, exacerbated by lackluster Chinese economic activity; on a positive note, Jefferies believes coal shipments will remain on a rising trend for several quarters or even years.

But Jefferies lowered its day rate forecasts to reflect the decline in charter rates, although the firm remains optimistic on longer-term prospects.

Jefferies rates Eagle Bulk Shipping (EGLE), Genco Shipping (GNK) and Star Bulk Carriers (SBLK) as its top picks in the dry bulk segment, offering investors "compelling platforms with low leverage, outsized earnings potential due to their scrubbers, and attractive valuations."

Diana Shipping (DSX) "used to be one of the most conservative companies in the shipping space, [but] it lost its way," Marel writes in an analysis posted on Seeking Alpha.

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