UPDATE: Credit Suisse Initiates Coverage on Scorpio Bulkers

In a report published Monday, Credit Suisse analyst Gregory Lewis initiated coverage on Scorpio Bulkers (NYSE: SALT) with an Outperform rating and $14.00 price target.

According to the report, it is believed SALT is in a strong position to take advantage of the pending dry bulk up-cycle with an aggressive growth plan (near bottom of the cycle) from a seasoned shipping investor with a proven track record.

“SALT has 52 newbuilds or 4M DWT of capacity on order, making it one of the largest global dry bulk owners (top 20),” the report said. “Following its U.S. equity raise (~$300M), SALT has ~$0.9B in cash against $1.3B in CAPEX, leaving ample capacity for incremental newbuild orders now and prompt tonnage acquisitions later (assuming modest leverage)—we expect both.”

Some highlights from the report included:

-”Although we believe the market hit an inflection point in mid-2013, we expect the move to midcycle rates to be more a 2015 event than 2014.” -”Christmas came early for SALT with its ~$300M equity raise and U.S. listing in mid-December 2013.” -”We believe SALT warrants a premium given its new fleet contracted at the trough in the cycle versus its peers, which have built their fleets throughout the cycle—higher average entry point.”

SALT closed Friday at $9.71.