Axia-Alpha Finance is initiating coverage of Star Bulk with a Buy rating and a price target of €31.4 per share, implying 23% upside from current levels.
In its report, titled “A Bulking Star”, the brokerage describes the shipping company as an attractive investment, despite the dry bulk sector being at a relatively advanced point in the shipping cycle. It notes that key market indicators remain strong, while limited new vessel supply and an ageing existing fleet create the conditions for a more orderly market adjustment in the coming years.
Star Bulk is the world’s fourth-largest dry bulk ship operator, with a fleet of 138 owned vessels and a further seven chartered-in. According to Axia-Alpha Finance, the company stands out for its operational efficiency, with operating costs of around $5,000 per vessel per day, among the lowest of its listed peers.
Limited supply of new vessels
At the market level, the brokerage estimates that freight rates and vessel values are currently around 50% and 20% higher, respectively, than in 2024. Although part of the increase is linked to vessel rerouting, which is not necessarily permanent, the supply outlook remains supportive.
In particular, new vessel orders amount to just 14%-15% of the existing fleet, as shipyards prioritise tankers and container ships, while high construction costs discourage new orders. At the same time, the ageing fleet could lead to selective vessel demolitions, easing pressure on supply.
Low costs and strong cash flow
One of Star Bulk’s key advantages, according to the report, is its low operating cost, which, combined with a fleet fully equipped with scrubbers, supports profit margins. The company benefits from the price differential between high- and low-sulphur fuels (the Hi-5 spread), which currently stands at more than $90.
The report also highlights the quality of earnings. Star Bulk does not use complex ownership structures involving third-party management companies, while dry-docking costs are charged directly to earnings when incurred, rather than being amortised over time.
Strong balance sheet and high distributions
The company’s financial position is another significant advantage. Net debt stands at around $353 million, against a total fleet value of $4.39 billion, putting net debt to fleet value at just 8%.
This strong position gives the company flexibility in capital management, the ability to maintain high distributions and scope to take advantage of opportunities to buy vessels at lower prices if the market enters a downturn.
On dividends, Axia-Alpha Finance notes that the variable dividend policy adopted in early 2026 essentially provides for the distribution of operating cash flow after investment and debt service.
Management has indicated a total capital return of more than $3 per share in 2026, with a similar level expected in 2027. Based on the current share price, this translates into a forward dividend yield of around 13%. Distributions are made quarterly.
Moreover, despite the brokerage’s conservative outlook for freight rates, the estimated dividend yield remains at 8.7% in 2028 and 7.4% in 2029.
Conservative forecasts for the next three years
Axia-Alpha Finance takes a cautious view of 2027-2029, expecting a gradual normalisation after a projected 43% rise in freight rates in 2026. Specifically, it forecasts an average annual decline in TCE rates, measured as a CAGR, of 8.9% over 2026-2029.
This would result in estimated annual declines of 14.6% in EBITDA and 21.4% in net profit over the same period. Despite the correction, net profit is still expected to remain above 2025 levels.
Athens Stock Exchange listing as a re-rating catalyst
On valuation, Star Bulk trades at a 28% discount to the net asset value of its fleet (NAV), or 0.72x NAV, as well as at 5.2 times estimated 2026 EBITDA, compared with 6.2 times for the sector.
Axia-Alpha Finance believes the company’s recent listing on the Athens Stock Exchange could act as a catalyst for a re-rating. It notes that European and, more broadly, non-US listed companies in the sector trade at higher multiples than their US counterparts.
For example, non-US dry bulk companies trade at an average of about 0.98x NAV, compared with 0.6x for US companies, while their respective 2026 EV/EBITDA multiples stand at 7.6 and 5.5 times.
In the brokerage’s view, a convergence in Star Bulk’s valuation towards the levels of its European peers could provide shareholders with additional upside. Using a combination of NAV, P/E and EV/EBITDA methodologies, it arrives at a price target of €31.4 per share and a Buy rating, with 23% upside.