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On Wednesday, Citi reaffirmed its Buy rating on Navigator (ELI:NVGR) Holdings Ltd. (NYSE:NVGS), maintaining a $22.00 price target. The firm addressed concerns regarding Navigator’s announcement about its $136 million debt due in September 2025, which raised questions about the company’s ongoing viability. Citi analyst Spiro Dounis provided insights, noting that Navigator expects to refinance the debt in the second quarter of 2025, potentially improving its liquidity position. According to InvestingPro data, the company’s current ratio stands at 0.75, confirming the tight liquidity situation, though the stock appears undervalued based on Fair Value analysis.
Dounis pointed out that refinancing is a routine process for shipping companies, especially when payment deadlines are approaching within a year of financial statement issuance. He cited the recent oversubscribed bond issue by Navigator in the fourth quarter of 2024, which achieved a historically low spread, indicating that bond markets are not showing signs of worry about the company’s financial health. InvestingPro analysis reveals the company maintains a solid Altman Z-Score of 5.56, suggesting low bankruptcy risk despite current liquidity challenges. Get access to 10+ additional ProTips and comprehensive financial analysis with InvestingPro.
Navigator Holdings reported earnings before interest, taxes, depreciation, and amortization (EBITDA) of $73 million for the fourth quarter of 2024, which was below Citi’s estimate of $76 million but aligned with the consensus. The shortfall was attributed to lower charter rates and increased general and administrative expenses. Additionally, the ethylene market has been under pressure due to maintenance issues, but Navigator anticipates an improvement in the arbitrage opportunities in the second quarter of 2025.
Citi’s analysis suggests that while there are near-term challenges, the overall outlook for Navigator Holdings remains positive, as reflected in the firm’s maintained Buy rating and price target. The company’s ability to navigate through the refinancing process and the expected recovery in the ethylene market are key factors underpinning this perspective.
In other recent news, Navigator Holdings Ltd. reported robust financial results for the first quarter, surpassing expectations with adjusted earnings per share of $0.38, compared to analyst estimates of $0.34. The company’s revenue also exceeded projections, reaching $144.03 million against a consensus forecast of $131.72 million. This performance was driven by strong demand and higher charter rates, with the average daily time charter equivalent rate at $28,341 per vessel per day. Navigator Holdings maintained a fleet utilization rate of 92.2% for the quarter, reflecting a slight improvement from the previous year.
Additionally, the company declared a quarterly cash dividend of $0.05 per share and plans to repurchase $1.9 million of its common stock by the end of the quarter. Stifel analysts have maintained a Buy rating on Navigator Holdings, setting a price target of $21, following the company’s strong fourth-quarter performance, where it reported adjusted earnings of $0.39 per share. The company’s recent operational activities include the completion of an expansion at its ethylene export terminal and the acquisition of three ethylene carriers. Although no new offtake agreements were announced, Navigator Holdings expects to secure contracts within the year due to increased terminal capacity.
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