NOL: UBS upgrades from negative to Neutral and raises TP to $2.48 from $1.82. In strategy Report, broker turning negative on bulk vs container shipping. Downgrade dry bulk sector view from Neutral to Negative. Note that 2011 will be challenging for dry bulk shippers due to a supply-led downturn, forecast a 10% YoY decline in the BDI, to an avg 2,500 in 2011…
Cite that policy tightening and structural changes in China’s economy indicate slowing demand growth for iron ore, forecast 10.6% vessel capacity growth in 2011 and expect supply growth to exceed demand by 5%. Add that record high container shipping profitability unlikely to repeat in 2011. Prefer container shipping to dry bulk on a relative basis.
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