UPDATE: Canaccord Genuity Downgrades Baltic Trading Limited (BALT), Paragon Shipping (PRGN) to Hold

(Updated - January 7, 2015 9:22 AM EST)

Canaccord Genuity downgraded Baltic Trading Limited (NYSE: BALT) from Buy to Hold with a price target of $3.00 (from $5.50). Paragon Shipping (NASDAQ: PRGN) was also downgraded to Hold with a price target of $4 (from $10). Navios Maritime Holdings (NYSE: NM), Pangaea Logistics Solutions (NASDAQ: PANL), Star Bulk Carriers (NASDAQ: SBLK), and Knightsbridge Tankers Ltd (NASDAQ: VLCCF) were maintained at Buy.

"While we continue to see long-term value in these stocks, especially at current prices, we see little in the way of catalysts that could spark significant upside over the next 12-18 months. In the near term, we believe SB and NM are the most defensively positioned dry bulk stocks due to their balance sheets and modest newbuild programs," said analyst Noah Parquette.

"Contrary to our previous outlook, we now believe the dry bulk market is suffering from significantly more overcapacity than we thought, and the imminent delivery of ships ordered in Q4/13 and Q1/14 could lead to an environment where 2015 and 2016 continue to experience rate weakness. We are worried that the growth in Chinese dry bulk shipyard capacity, and to a lesser extent the availability of capital for new vessels, has broken the typical cyclical dynamics of the sector," continued the analyst.

Parquette added, "Part of this overcapacity has been masked by a fleet running at slower speeds; however, with bunker fuel prices coming down along with crude oil prices, we believe the dry bulk industry has the potential to enter a "speed trap" over the coming years as the fleet has greater ability to provide additional supply by speeding up to match growing demand ... Given the supply issues facing dry bulk, we believe substantial amount of demand is necessary for the sector to grow its way out of its dilemma."

For an analyst ratings summary and ratings history on Baltic Trading Limited click here. For more ratings news on Baltic Trading Limited click here.

Shares of Baltic Trading Limited closed at $2.24 yesterday.

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