Teekay Tankers Ltd. (TNK) shares rose more than 10% during Wednesday's session after Jefferies upgraded the stock to Buy with a price target of $2.50 per share. Analyst Randy Giveans believes that asset values are starting to reflect the massive increases in charter rates across the shipping sector. He expects OPEC production surprises to the upside to cause crude oil tanker demand and charter rates to strengthen over the coming months and quarters.
Earlier this week, the stock rose more than 20% after Russia's Novatek (NOVKY) said that the joint venture between Teekay LNG and China LNG Shipping was no longer subject to U.S. sanctions. The joint venture had previously been designated as a "blocked person" under U.S. sanctions imposed last month against subsidiaries of the Chinese shipping firm COSCO SHIPPING Holdings Co., Ltd. (CICOY). The company plans to reschedule its analyst meeting following the developments, with details coming soon.
From a technical standpoint, the stock broke out from its 52-week highs set earlier this week in a continuation of its rally dating back to early October. The relative strength index (RSI) remains in overbought territory with a reading of 76.42, but the moving average convergence divergence (MACD) remains in a bullish uptrend despite a recent dip. These indicators suggest that the stock could see some near-term consolidation, but the overall trend remains bullish for the time being.
Traders should watch for some consolidation between $1.80 and $2.20 over the coming sessions unless the stock breaks out definitely higher from its current range. If the stock breaks down from these levels, traders could see a move to test the 50-day moving average at $1.38. If the stock breaks out, it could continue to set fresh 52-week highs.
The author holds no position in the stock(s) mentioned except through passively managed index funds.