Core Viewpoint - BofA Securities has raised its price target for Scorpio Tankers to $70 from $61 while maintaining an Underperform rating, reflecting a cautious outlook despite recent positive developments in tanker rates [1]. Financial Estimates - The analyst increased first-quarter 2026 earnings estimates by 17% to $2.73 per share and full-year 2026 estimates by 3% to $6.35 per share, driven by a surge in product tanker rates following disruptions in vessel activity due to U.S.–Iran tensions [2]. - The revisions in earnings estimates were made despite Scorpio's sale of three vessels, which reduced its fleet size [2]. Market Conditions - Traffic through the Strait of Hormuz has dropped by over 90%, significantly impacting shipping routes, but historical trends suggest that such disruptions do not lead to prolonged shutdowns [3][4]. - BofA has raised its first-quarter LR2 tanker rate forecast to $47,000 per day from $43,000 per day and increased its MR tanker rate outlook to $27,700 per day from $25,700 per day, indicating a positive shift in market conditions [3]. Valuation Metrics - BofA maintained its Underperform rating while raising its price objective to $70, applying a 6.0x multiple to its 2026 EBITDA estimate, up from 5.25x previously, which still reflects concerns about rising vessel capacity and potential geopolitical changes [5]. - The revised valuation remains below the midpoint of Scorpio's five-year trading range of 4.5x to 8.5x EBITDA, indicating ongoing caution in the market [5].