The vessel ended its previous contract at the end of 3Q22 and was undergoing drydock repairs.
ESEA bought the Akinada Bridge vessel in 2017 for $11 million.
Based on depreciation since that purchase and potential asset impairments on other vessels amid lower containership rates, Sullivan forecasted a net gain of $3 million from the sale in 1Q23.
The analyst believed ESEA sold the ship to a buyer that would scrap the ship, which Sullivan expected allowed ESEA to sell the ship without incurring high drydocking costs in 4Q22.
Consequently, Sullivan increased the 4Q22 EPS estimate to $2.75 (down 12.1% Y/Y) from $2.27.
Sullivan reduced 2023 and 2024 revenue and EPS estimates.
The analyst raised the 3Q23 BV/share forecast but reduced 4Q23.
Sullivan reduced the price target multiple amid higher interest rates and expectations for slower global economic growth.
The analyst maintained a Buy rating as expected ESEA’s existing contract coverage would help the company maintain a leverage ratio below 2x while adding nine new containerships, repurchasing shares, and maintaining the quarterly dividend.
Price Action: ESEA shares traded lower by 0.8% at $18.55 on the last check Friday.
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