Citi upgrades NOL to buy from sell

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: Citigroup

Price Call: BUY

Target Price: 1.35

Citi upgraded container shipping firm Neptune Orient Lines to ‘buy’ from ‘sell’ and raised its target price to $1.35 from $1.05, saying the company’s improved strategy may bring it back to profitability this year.

By 1:35 p.m., NOL shares were flat at $1.07, having dropped 4.9% so far this year, compared to the Straits Times Index’s 12.7% gain.

NOL’s earnings in the second half of the year and in 2013 may hold firm due to its high exposure to the relatively stable Transpacific trade.

Deliveries of lower-cost new ships could also mitigate an expected decline in freight rates, Citi said.

“The market may have over-looked progress in NOL’s improved strategy, due to lack of clear data points. However, this may eventually be reflected in a doubling of profits and return on equity in 2013,” the brokerage said.