What happened

Shares of Seaspan Corporation (NYSE:ATCO) rallied 15% last month thanks to a bullish analyst note.

So what

Seaspan's stock bobbed around the flatline for most of April until an analyst at Deutsche Bank upgraded the containership leasing company from hold to buy toward the end of the month. What stood out was the $13 price target, which was 85% above the bank's previous one of $7 a share. Driving that bullish view is the expectation that Seaspan's ability to deleverage its balance sheet and increase the dividend would fuel substantial share price appreciation in the future.

A sailing containership at sunset on the sea.

Image source: Getty Images.

That analyst isn't alone in recently voicing bullishness on Seaspan's future. Bank of America/Merrill Lynch also upgraded the stock in early May. In this case, the bank raised its rating from neutral to buy while boosting its price target from $6.20 to $10 a share. Driving that upgrade was Seaspan's strong operational performance in the first quarter as well as the view that the company will benefit from its recent acquisition of CGI and an improving container trade market. Furthermore, it also thought that Seaspan's increasing cash flow would accelerate its ability to pay down debt.

Now what

Seaspan appears to finally be starting to turn the corner after several challenging years. As a result, the stock could have much more upside ahead of it as improving shipping rates bolster its bottom line, giving it more cash to retire down debt and pay dividends. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.