EuroDry (EDRY) – Lower results reflect declining shipping rates, Price Target lowered.

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Monday, November 14, 2022

EuroDry Ltd. was formed on January 8, 2018 under the laws of the Republic of the Marshall Islands to consolidate the drybulk fleet of Euroseas Ltd. into a separate listed public company. EuroDry was spun-off from Euroseas Ltd. on May 30, 2018; it trades on the NASDAQ Capital Market under the ticker EDRY. EuroDry operates in the dry cargo, drybulk shipping market. EuroDry’s operations are managed by Eurobulk Ltd., an ISO 9001:2008 and ISO 14001:2004 certified affiliated ship management company and Eurobulk (Far East) Ltd. Inc., which are responsible for the day- to-day commercial and technical management and operations of the vessels. EuroDry employs its vessels on spot and period charters and under pool agreements.

Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

EuroDry reported 2022-3Q revenues, EBITDA and net income below comparable periods and our estimates. Net revenues of $15.8 million were below that of the same period last year ($19.5 million), the 2022-2Q ($21.0 million) and our estimate ($19.5 million). Results reflect a decline in TCE rates to $20,637 and a reduction in voyage days due to 92 scheduled off days. Adjusted ebitda was $9.5 million as the $4-5 million revenue shortfall versus previous periods and our estimate carried down to the ebitda line. Adjusted net income was $5.7 million, or $1.93 per share, well below our $9.5 million or $3.27 per share estimate.

The company’s sensitivity to shipping rates is apparent as it locks in rates at lower prices. EuroDry has locked in 53% of 2022-4Q shipping days but virtually no days beyond 2022. Shipping contracts agreed in recent months have largely been below $15,000 reflecting a 35-50% drop in pricing since the second quarter. Management remains confident shipping rates will eventually improve as global economic conditions improve but near-term comps will be tough. As such, this quarter’s decision to schedule off days for repairs and ship improvements while rates are low seems logical.

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This Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 


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