It was more than smooth sailing for the stock of maritime logistics specialist Scorpio Tankers (STNG -0.05%) on Monday. A recommendation upgrade from an analyst at a very well-known bank powered the company's equity that trading session, sending it to a nearly 11% increase at market close. That trounced the S&P 500 index's 0.2% bump higher.
Higher rates prompt bullish revision
That analyst is Ken Hoexter of Bank of America Securities. That morning, Hoexter flipped the switch on the upgrade, moving it a notch higher to buy from his previous neutral. The prognosticator accompanied this with a significant price-target hike to $60 per share. Previously, he felt it was worth $49.
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According to reports, Hoexter's adjustments are due in no small part to rising product tanker rates. The analyst wrote that these are increasing despite the fact that we're not yet in the critical fall season. Such a dynamic bodes well for Scorpio's immediate future.
The Bank of America pundit feels that this will continue through the end of this year and will be due to a number of factors, including the apparent unwinding of production cuts by the ever-influential oil industry association -- the Organization of the Petroleum Exporting Countries (OPEC).
New earnings estimates
With these tailwinds about to blow, in Hoexter's view, he raised his profitability estimates for Scorpio's 2025 third quarter plus full-year 2025 and 2026. For the quarter, he's raised his per-share earnings forecast by a robust 39%. For the two years, he's hiked his projections by a respective 7% and 28%.
