What Happened?
Shares of tanking company Scorpio Tankers (NYSE: STNG) fell 3.1% in the afternoon session after the company announced an agreement to sell one of its MR product tankers.
The company disclosed it is selling its 2020-built scrubber-fitted tanker, the STI Maestro, for $42.0 million, with the sale expected to close in the fourth quarter of 2025. While the transaction bolsters the company's cash reserves, the move also reduces the size of Scorpio Tankers' fleet. This reduction has raised concerns that it may negatively impact the company's capacity to transport petroleum products, potentially affecting future revenue generation. The negative sentiment comes amid a backdrop of analyst forecasts pointing to shrinking earnings for the company, making investors sensitive to any developments that could hinder growth.
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What Is The Market Telling Us
Scorpio Tankers’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock gained 8.6% on the news that it received positive attention from Wall Street, including a price target increase from Jefferies and an upgrade from BofA Securities. Jefferies raised its price target on the stock to $70 from $65, maintaining a Buy rating and citing rising product tanker rates as a key factor. The firm noted that Scorpio Tankers is a "prime beneficiary" of this trend.
Adding to the bullish sentiment, BofA Securities upgraded the stock to Buy from Neutral, setting a price target of $60. The positive news was further supported by a company announcement that it secured a five-year charter for one of its LR2 product carriers at a rate of $28,350 per day, locking in a steady income stream. These developments highlight strong financial health and growing confidence in the company's market position.
Scorpio Tankers is up 14.3% since the beginning of the year, but at $57.17 per share, it is still trading 23.1% below its 52-week high of $74.31 from October 2024. Investors who bought $1,000 worth of Scorpio Tankers’s shares 5 years ago would now be looking at an investment worth $4,509.
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