We downgrade our recommendation on
Excel Maritime Carriers
) to Underperform ahead of its fourth quarter of 2011 financial
results. We believe the drybulk shipping industry has a gloomy
outlook, facing serious challenges since spot vessel rates
The sole reason for this dismal condition is the sheer increase of
newbuild ships under operation, which resulted in intense price
competition. The spot rates of drybulk vessels have fallen to such
low levels that even surging commodity prices in the Asian markets
have failed to offset the loss of the vessel owners. We believe
continuation of this pricing trend will certainly jeopardize the
company's future financials.
In the last couple of quarters, Excel Maritime took a severe hit on
its time charter equivalent rate. Additionally, its balance sheet
is highly leveraged. We do not find any near-term catalyst.
EXCEL MARITIME (
): Free Stock Analysis Report
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