Genco stock was trading recently at $11.98, up nearly 4%, having eased back from an intraday high of $12.49.
According to one analyst who participated in the company's conference call to discuss fourth-quarter results Thursday morning, Genco management did a good job ameliorating investors and analysts by indicating that the company will generate substantial cash this year, despite a severe decline in rates for the largest dry-bulk ships.
Genco shares have been heavily shorted. As of Jan. 31, short positions amounted to 17.5% of its float, the highest of any dry-bulk shipper. Short covering may partly explain the severity of Thursday's rise.
After the bell on Wednesday, Genco reported earnings per share of 90 cents. On average, Wall Street's sell-side analysts were targeting EPS of 96 cents.
The company also said it would stick to its current strategy of engaging its ships under short-term contracts in hopes of a rebound in the market for ocean-going commodities transport. On the spot market, dry-bulk freight rates have been severely depressed since the beginning of the year.
In a note to clients Thursday morning, Omar Nokta, a shipping analyst at Dahlman Rose in New York, said Genco has 37.4% of its fleet's operating days locked into charters for 2011. Other dry-bulk shippers, including
, have as much as 100% coverage.
Meanwhile, Credit Suisse analyst Greg Lewis trimmed his 2011 profit forecast for Genco to $1.56 from $1.78 a share. Among the 15 analysts with published 2011 EPS estimates, the consensus projection is $1.92.
In a note to clients, Lewis said he expects Genco to "continue to re-charter vessels primarily in the spot market which should result in more volatile earnings than GNK has generated in the past."
-- Written by Scott Eden in New York
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