Navios gains analyst boost thanks to buybacks, fleet renewal

On 19 September, investment bank Jefferies raised its price target for the US-listed shipping company from US$65 to US$80, maintaining a ’Buy’ rating. At the time of the report’s release, Navios’ shares were trading around US$56.

Navios has been the top performer among the shipping companies in Jefferies’ coverage for 2024. According to MarketWatch data, Navios’ share price has surged by over 100% year-to-date, pushing its market capitalisation beyond US$1.6Bn.

Nevertheless, from an asset value and free cash flow perspective, Jefferies has described Navios shares as “deeply undervalued.” In its Q2 earnings report, Navios estimated the net asset value per unit at US$140.

Management is actively utilising the share buyback programme while continuously rejuvenating the fleet, with a focus on building a solid revenue backlog, the investment bank highlighted in its report.

Accelerated share repurchases

On 12 September, Navios disclosed it had accelerated its share repurchase programme. In July 2022, the company’s board authorised a buyback of up to US$100M in common units.

As of 4 September, Navios had repurchased 246,573 common units, amounting to approximately US$12.2M. Notably, by 20 August - when the Q2 earnings were published - the company had spent US$9.7M on repurchases.

Investors closely monitoring the US shipping stock market told Riviera that shareholder-friendly policies are a key differentiator between listed companies. Sustained dividends, buybacks and insider stock purchases are seen as pivotal factors driving share price growth, especially when backed by a healthy balance sheet. The broader market environment in individual shipping sectors tends to play a secondary role in investors’ decision-making.

Major newbuilding programme

Navios has been actively renewing its fleet, selling older vessels at attractive prices while placing significant orders for new tonnage.

During its Q2 financial results announcement, the Greece-based owner revealed newbuilding deals for six additional tankers. Navios’ orderbook now includes 20 tankers - 14 Aframax/LR2 and six MR2 product tankers - set to be delivered by the first half of 2028. The company has also ordered seven container vessels, including three 5,300-TEU ships, two 7,700-TEU vessels, and two 7,900-TEU vessels, scheduled for delivery by 2026. Altogether, these projects represent an investment of US$1.8Bn.

Since the beginning of 2024, Navios has sold seven vessels, with an average age of over 17 years, bringing in US$157.2M in sales.

Currently, Navios’ fleet consists of 74 bulk carriers, 48 container ships and 56 tankers, including vessels under construction.

Expanding charter backlog

In Q2 2024, Navios secured long-term charters for 18 vessels, projected to generate revenues of US$561.0M.

With these new contracts, the company’s total contracted revenues now stand at US$3.7Bn, stretching through to 2037.