Oil prices rose more than 7% on Thursday after the International Energy Agency (IEA) predicted three million barrels per day (bpd) of Russian oil and products might be blocked starting next month. U.S. West Texas Intermediate (WTI) crude rose $4.57, or 4.8%, to $99.66 per barrel.
The government's recent decision to ban imports of Russian oil, gas and other energy products could further increase oil prices. In addition, according to reports, oil consumption is anticipated to rise to 100.23 million barrels per day (mb/d) in 2022, up 3.5 million barrels per day (mb/d) from 2021 and higher than pre-pandemic levels in 2019. While the import ban may affect tanker companies that transport fuel worldwide, analysts do not expect any significant impact on their business.
So, given the upbeat performance of the energy sector, Wall Street is bullish on fundamentally sound oil tanker stocks International Seaways, Inc. (INSW), Teekay Tankers Ltd. (TNK), and Nordic American Tankers Limited (NAT).
International Seaways, Inc. (INSW)
New York City’s INSW owns and operates a fleet of oceangoing vessels to transport crude oil and petroleum products in the international flag trade. It also serves independent and state-owned oil companies, oil traders, refinery operators, and international government entities. Crude Tankers and Product Carriers are its two operational segments.
INSW's total shipping revenue increased 67% year-over-year to $94.67 million in the fourth quarter, ended Dec. 31, 2021. The company's cash and cash equivalent stood at $97.88 million for the fiscal year ending Dec. 31, 2021. Its adjusted EBITDA came in at $11.84 million compared to a $4.96 million loss in the previous year's quarter.
The company's revenue is expected to increase by 114% year-over-year to $96.65 million in the first-quarter, ending March 31, 2022. The consensus $4.09 EPS estimate for fiscal 2023 represents a 211.3% year-over-year increase.
The company's shares have surged 13% in price year-to-date and 12.3% over the past three months.
Among the three Wall Street analysts that rated INSW, two rated it Buy, and one rated it Hold. The 12-month median price target of $26.50 indicates a 59.7% potential upside. The price targets range from a low of $23.00 to a high of $30.00. The stock closed its last trading session at $16.59.
Teekay Tankers Ltd. (TNK)
Headquartered in Hamilton, Canada, TNK provides marine transportation services to oil industries worldwide. It offers voyage and time charter services; and offshore Ship-to-ship transfer services of commodities, primarily crude oil, and refined oil products, along with liquid gases and various other products.
During the fourth quarter ended Dec. 31, 2021, TNK's total revenue increased 25.4% year-over-year to $160.31 million. Its total adjusted EBITDA was reported at $9.69 million compared to a$15.79 million loss in the previous year's quarter. The company's full-service lightering business earned a premium rate of $22,200 per day in the fourth quarter of 2021, improving its overall Aframax (Average Freight Rate Assessment) earnings for the quarter.
TNK is expected to witness revenue growth of $74.27 million, representing 43.8% year-over-year growth, in the first quarter (ended March 31, 2022). The stock has gained 16.3% in price year-over-year and 13.9% over the past three months.
The three Wall Street analysts that rated TNK rated it Buy. The 12-month median price target of $21.33 indicates a 68.2% potential upside. The price targets range from a low of $20.00 to a high of $22.00. The stock closed its last trading session at $12.68.
Nordic American Tankers Limited (NAT)
NAT is a tanker company that acquires and charters double-hull tankers in Bermuda and internationally. It operates a fleet of 25 Suezmax crude oil tankers. It is headquartered in Hamilton, Bermuda.
In the fourth quarter, ended Dec. 31, 2021, NAT's net voyage revenue increased 38.9% year-over-year to $22.63 million. Its adjusted EBITDA came in at $1.90 million compared to a $5.10 million loss in the previous year's quarter.
Analysts expect NAT's revenue to increase 17.1% year-over-year to $22.03 million for the first quarter, ending March 31, 2022. The company's shares have soared 12.4% in price year-to-date and 28.4% over the past month.
Of the two Wall Street Analysts that rated NAT, one rated it Buy, and one rated it hold. The 12-month median price target of $2.53 indicates a 33.2% potential upside. The price targets range from a low of $2.30 to a high of $2.75. The stock closed the last trading session at $1.90.
INSW shares were trading at $16.81 per share on Thursday afternoon, up $0.22 (+1.33%). Year-to-date, INSW has gained 14.89%, versus a -7.40% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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