Shares of the marine transportation company dropped by about 19% on Thursday after Scorpio Bulkers announced that it priced a public offering of 21 million shares of common stock at $3 per share. The proceeds of the public offering will be used for "general corporate purposes," the company said.
The $63 million equity offering will create an "extended runway for recovery," Jefferies said.
"The company already has a fully financed newbuilding program and over $160 million of cash on hand," the firm added. "While this marks the third equity offering since SALT went public in 2013, we do not foresee the company taking any further dilutive measures now that their liquidity has been addressed."
However, the dry bulk shipping market has been weak so far this year, according to Jefferies. The market will likely continue to be hurt by weak Chinese iron ore and coal import demand.
Scorpio Bulkers stock is up 0.34% to $2.96 in pre-market trading on Friday.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings rates this stock as a "sell" with a ratings score of E+. This is based on some significant below-par investment measures, which should drive this stock to significantly underperform the majority of stocks that we rate. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
You can view the full analysis from the report here: SALT