Overseas Shipholding Group (OSG)

We are lowering our recommendation on Overseas Shipholding Group, Inc. (OSG) to Sell from Hold as we believe the impact of the global economic slowdown will be more pronounced than previously expected. Consequently, we have cut our 2009 revenue assumptions due to reduced estimates for spot market rates (roughly 45% of the company's fleet is exposed to the spot market) and fewer revenue days.

At the same time, we have decreased our 2009 diluted EPS estimate to $3.75 from $7.15. Our 2008 estimate remains $12.90. OSG reported third quarter diluted EPS of $4.84, well above consensus of $3.60 and our $3.10 estimate, primarily due to stronger than expected revenue growth from higher spot tanker rates and increased revenue days.

While OSG recently increased its dividend by 40%, we cannot rule out a dividend cut in the event of a protracted economic downturn.

Overseas Shipholding Group (OSG) : FULL ANALYST REPORT

Read the full analyst report on OSG