How These Analysts Are Betting On Rising Dry Bulk Rates

• Star Bulk Carriers Corp. (NASDAQ: SBLK) has seen an almost 60 percent decline in its share price, from the high of $6.56 on December 31, 2014.
• Amit Mehrotra of Deutsche Bank has upgraded the rating on Star Bulk from Hold to Buy, while maintaining a price target of $3.
• Checks in Asia in the week ended September 25 revealed that an optimistic near-term outlook for dry bulk spot rates.

Analyst Amit Mehrotra believes that Star Bulk is the best positioned to benefit from the positive outlook for dry bulk in the near term, given the company’s huge fleet of 70 ships on-the-water.

In addition, given the meaningful selloff in the stock, the downside now appears limited, while the company has a “significant cash cushion,” following its two equity financings. The recent recovery in spot prices has also helped Star Bulk’s opex to rebound to well above breakeven levels.

“We also see upside in SBLK shares as investors start to prescribe some relevancy to net asset value in a stable and recovering spot rate environment,” Mehrotra said.