Excel Maritime (NYSE:EXM) Charters Support Risk-Reward Near Term

Excel Maritime (NYSE:EXM) has entered into charters for seven of its Kamsarmax vessels for approximately 1 year, offering support and upside if day rates increase.

FBR said, "Excel entered into charters for seven of its Kamsarmax vessels for roughly one year, increasing the company's 2011 contract coverage to 45% from 27%. The charters provide for a floor day rate at the break-even rate that we estimate at roughly $15,000 per day and allow for 100% of the upside since the rates are linked to the Panamax index. We believe the contract announcement reduces the downside risk to earnings if there is weakness in the dry bulk market, while preserving the upside if day rates improve from current levels. We maintain our rating on EXM, even though we believe these contracts improve the near-term risk-reward for EXM."

FBR Capital maintains a "Market Perform" rating on Excel Maritime, which closed Tuesday at $5.73, up $0.12, or 2.14 percent. FBR has a price target on them of $6.