K-Sea Transportation Partners jumps on upgrade

NEW YORK

Shares of K-Sea Transportation Partners LP rose Friday as a Stifel Nicolaus analyst upgraded the barge operator's stock to "Hold" from "Sell."

THE SPARK: Analyst Selman Akyol said the supply and demand balance appears to be improving for barge operators, with more customers having to secure term charters rather than just nabbing ships on the spot market. Akyol also applauded K-Sea's recent agreement in which it plans to raise up to $100 million through a preferred unit exchange.

THE ANALYSIS: Akyol said the added capital will improve the company's financial flexibility and "relieve the stress" on its earnings in the coming quarters. But he added that though rates for barges have been propped up by cleanup work in the Gulf, refinery and diesel transportation demand, they are still relatively weak. Akyol thinks 2011 will be "a transitional year" in which older ships are phased out and recontracted for lower rates, so investors should still be cautious with the stock.

SHARE ACTION: Shares of K-Sea rose 28 cents, or 6.3 percent, to $4.67 in afternoon trading. The stock is near a 52-week low -- it has traded between $4 and $23.50 in the past year.