JP Morgan downgraded Frontline (FRO
) to underweight from neutral, citing ongoing weakness in tanker spot markets.
Analyst Jonathan Chappell says the industry has come under severe pressure over the last few weeks, which might lead to downward earnings per share (EPS) revisions for Frontline and shrinking dividends. He says Frontline is the largest publicly traded operator of Very Large Crude Carrier and Suezmax tankers. The company has a propensity to employ its assets mostly on the spot market, despite some recent time-charter contracts. He's expecting seasonal rate weakness to prevail through summer. He cut his $2.33 first quarter EPS estimate to $2.28 and his $3.55 2006 estimate to $3.50.