Scorpio Tankers Target Raised to $70 as Q1 Fleet Rates Surge 23%
BofA raised its price target on Scorpio Tankers to $70 from $61 and lifted 2026 EPS estimates to $2.73 for Q1 and $6.35, citing a >90% slump in Strait of Hormuz traffic. It forecasts Q1 fleet rates to climb 23% to $34,700/day and maintains an Underperform rating.
1. Price Target and Rating
BofA raised its price objective on Scorpio Tankers to $70 per share from $61 while keeping an Underperform rating, reflecting expectations of cyclical peaks in tanker rates and concerns over rising vessel capacity and potential sanction removals.
2. EPS Forecast Revisions
The bank increased Q1 2026 EPS estimate by 17% to $2.73 and full-year estimate by 3% to $6.35 per share, driven by shipping disruptions that improved product tanker rates after U.S.–Iran tensions reduced fleet utilization.
3. Shipping Rate Surge
Traffic through the Strait of Hormuz plunged over 90%, prompting BofA to boost its LR2 rate forecast to $47,000/day from $43,000/day and its MR rate outlook to $27,700/day from $25,700/day, with Scorpio’s average fleet rate seen climbing 23% sequentially to $34,700/day in Q1.
4. Valuation Multiple and Risks
The analyst applied a 6.0x multiple to 2026 EBITDA, up from 5.25x, but still below the midpoint of the five-year trading range, noting the threat of increased vessel capacity, possible lifting of Russia sanctions and the risk of rates reverting from cyclical highs.