On Wednesday, Evercore ISI adjusted its financial outlook on DHT Holdings (NYSE:DHT), decreasing the stock's price target to $13 from the previous $14, while retaining an "Outperform" rating. The firm's analysis noted that DHT Holdings reported third-quarter 2024 earnings per share (EPS) of $0.22, surpassing both Evercore ISI's projection of $0.21 and the consensus estimate of $0.19. The better-than-expected performance was largely attributed to lower general and administrative costs.
The company's commitment to a 100% payout policy was evident as it declared a third-quarter dividend of $0.22 per share, cumulating to a total of $0.78 per share year-to-date. This distribution equates to a yield of 7.7% for just three quarters of the year. DHT Holdings also secured two short-term contracts during the summer at rates significantly higher than current spot market levels, providing a financial cushion as the anticipated seasonal increase in spot rates has yet to materialize.
Despite an improvement in fourth-quarter-to-date rates since last month's operational update, the figures still fall short of most forecasts, leading to a downward revision of Evercore ISI's fourth-quarter EPS and dividend per share estimates for DHT Holdings to $0.21 from $0.24. However, the firm's 2025 forecasts remain unchanged at $0.95 for EPS, with the associated dividend reflecting a 9.4% yield.
DHT Holdings' shares are trading at a 20% discount to net asset value (NAV), and Evercore ISI anticipates that a seasonal rise in rates would help narrow this valuation gap. The firm also highlighted DHT Holdings as the sole pure-play Very Large Crude Carrier (VLCC) operator in the public market, a segment that benefits from the smallest order book and could gain from potential increased restrictions on Iranian oil production. With these factors in mind, Evercore ISI maintains its positive stance on DHT Holdings with a revised 12-month price target of $13.
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