Recovering slightly from the 36% plunge they experienced through the first 11 months of 2017, shares of Seaspan Corporation (NYSE:SSW) rose 15% in December, according to S&P Global Market Intelligence. Shareholders were responding to an analyst's rating on the company's stock and the expansion of Seaspan's fleet.
Celebrating the delivery of its fifth shipping vessel in 2017, management announced that it had received the MSC Madhu B in December. According to the company's press release, the vessel is an 11,000 twenty-foot equivalent unit containership that will commence a bareboat charter with MSC Mediterranean Shipping Company S.A. (MSC) under a 17-year contract. MSC, furthermore, is obligated to purchase the vessel for a pre-determined amount upon completion of the contract period. The MSC Madhu B is the fourth of five vessels of its type under contract to MSC. Seaspan expects delivery of the fifth vessel in Q1 2018.
The main factor that drove shares higher in the month, however, was a thumbs-up from Wall Street. Randy Giveans, an analyst at Jefferies, initiated coverage at buy and assigned a $20 price target -- noteworthy considering shares traded as low as $5.02 earlier in 2017. Seaspan wasn't alone in making a splash with the analyst, though. According to TheFly.com, Giveans recognized that the energy maritime shipping industry is "primed for significant improvement." Further demonstrating this bullish outlook on the sector, Giveans assigned buy ratings to two of Seaspan's peers: Star Bulk Carriers and GasLog Partners.
Although Wall Street oftentimes bases its decision to issue an upgrade or downgrade on a shorter-term view of the stock -- something which we discourage -- the analyst's rating, in this case, is also relevant to those with longer time horizons. That's not to say that one should rush out and pick up shares. However, it does substantiate a bullish outlook on the stock and suggests that interested investors should watch how well this leader in shipping-management solutions navigates the waters in 2018.