Bank of America says Scorpio tankers are likely to continue to outperform even as the U.S. and Iran appear to be nearing an end to their war. The bank upgraded the name of an oil transportation company to buy it out of poor performance. He also raised his price target to $100 from $76, implying a 21% upside from Wednesday’s closing price. Analyst Ken Hexter said in a note Wednesday that tanker shippers are poised to be boosted “by the sustainability of high rates and inventory replenishment needs even if, or even if, hostilities with Iran end.” “We expect interest rates to decline in the coming quarters but remain at historically high levels, generating significant amounts of free cash.”As of late Wednesday, Iran and the United States were close to signing a one-page memorandum of understanding that would begin talks on key issues between the belligerents and put them on the path to a peace agreement. Since the dispute began in late February, Scorpio tankers have booked more deals due to increased ton-mile demand. This has boosted the company’s stock price, which is up 62% this year. STNG YTD Mountain STNG YTD YTD According to the company’s analyst notes, bookings for the company’s specialty vessels such as the Long Run 2 and MR Product Tanker increased compared to Bank of America’s expectations. Bank of America’s call echoes the consensus on the street. Nine out of 11 analysts covering Scorpio rate the stock as a buy or strong buy, according to LSEG data.
