BofA Downgrades Scorpio Tankers on Peak Earnings Concerns

Scorpio Tankers (NYSE: STNG) was downgraded to Underperform from Buy by BofA Securities, which cut its price target to $53 from $67. Shares fell more than 3% intraday on Friday following the downgrade.

The analyst said the revised target was based on a 5.0x multiple applied to estimated 2026 EBITDA, down from a prior 6.0x multiple and below the midpoint of the company’s five-year valuation range of 4.5x to 8.5x EBITDA.

BofA pointed to the company’s decision to lock in additional time-charter contracts as a signal that management viewed current tanker rates as near peak levels. The firm also cited the possibility of a peace agreement between Russia and Ukraine in the year ahead, which could unlock additional product tanker capacity and pressure freight rates.

Given these dynamics, BofA said it viewed Scorpio Tankers’ earnings as being closer to peak levels, with rates likely to trend lower going forward, prompting the downgrade.