Wall St. Analysts Eye 51% Upside in Scorpio Tankers (STNG) Stock

There’s an industry most investors tend to overlook: tankers. And one particular tanker manufacturer is currently offering investors deep value in a shallow market: Scorpio Tankers (STNG).

I find the tanker industry fascinating because it operates at the intersection of global trade, geopolitics, and supply chain dynamics. I’ve been bullish on Monaco-based yet U.S.-listed Scorpio Tankers (STNG) for some time now but underwhelmed by its share price performance. However, despite some near-term weakness in tanker demand, I’m even more bullish today than I was last year.

The stock is up 260% over the past 3 years, but down 22% over the past 12 months, which suggests a bargain opportunity to haul this relatively small but sturdy stock into my portfolio.

The reasoning for my bullishness centers around the availability of tankers, with very few new assets coming online in the near future. The result is one of the oldest global tanker fleets in living memory. As a company supplying one of the most modern fleets in the market, Scorpio stands to prosper.

STNG: A Young Fleet in an Aging Maritime Landscape

Scorpio Tankers is positioned to benefit significantly from structural tanker shortages driven by an aging global fleet and constrained supply growth. The product tanker fleet averages 13.6 years, with 18% of vessels over 21 years old, while Scorpio’s fleet averages just 8.6 years – the youngest among major operators.

With the product tanker order book-to-fleet ratio at 19.6% and shipyards prioritizing containers/LNG carriers, tanker supply growth will likely lag demand in 2025. Only 80 newbuild tankers are projected for delivery in 2025, which is insufficient to offset retirements, as shipyard backlogs from pandemic-era closures delay orders until 2026/2027.

Moreover, geopolitical disruptions like Houthi attacks in the Bab el-Mandeb Strait have forced rerouting via Africa, increasing voyage distances by at least 30% and tightening vessel availability. These factors compound inefficiencies from the “shadow fleet” — Russia’s clandestine attempt to avoid international sanctions by unofficially exporting oil.

How Scorpio Benefits from Lacklustre Tanker Supply

Scorpio Tankers is uniquely positioned to capitalize on structural tanker market dynamics through its young, scrubber-equipped fleet and strong financial position. With a younger average fleet age, Scorpio doesn’t have the inefficiencies of aging tonnage, including higher maintenance costs and regulatory risks tied to emissions compliance. Modern vessels equipped with scrubbers — 88% of its fleet — enable vast fuel savings of up to $22,000/day, translating to much higher daily earnings compared to non-scrubber peers in tight markets.

Moreover, Scorpio’s operational leverage to rate hikes is amplified by its debt-free position ($180 million from recent vessel sales), enabling opportunistic fleet upgrades or share buybacks. This also means it has lower operational costs than many of its peers, making it better positioned to deal with any downturn in the market.

Shipping and tanker expert J. Mintzmyer highlights Scorpio’s advantage in a “finite tanker supply environment,” where shipyards face 3-year backlogs for new orders. This scarcity creates a “sustained supercycle” for modern fleets, and by maintaining a young fleet while peers grapple with aging assets, Scorpio is poised to dominate charterer preference and maximize returns through 2026+. Moreover, the company’s spot-market focus — albeit down from 91% of fleet exposure in 2023 — allows it to capture surging rates driven by rerouting disruptions.

Scorpio Remains Attractively Priced

I’m also bullish because Scorpio Tankers offers compelling valuation metrics, with a forward price-to-earnings ratio of 5x, significantly below the energy sector median of 12.3x and its own 5-year average of 8.2x. This represents a 59.6% discount to the sector and a 39.7% discount to its historical average.

The forward price-to-book (P/B) ratio stands at 0.84, 44.3% below the sector median of 1.5x, indicating the stock is undervalued relative to its book value. These metrics suggest Scorpio is attractively priced compared to both its peers and its own historical valuation.

Is STNG Stock a Good Buy?

On TipRanks, STNG comes in as a Strong Buy based on three Buys, one Hold, and zero Sell ratings assigned by analysts in the past three months. The average STNG stock price target is $75.25 per share, implying about 51% upside potential. 

See more STNG analyst ratings

Scorpio Tankers is Ready to Set Sail

Scorpio Tankers stands out in a tightening tanker market, benefiting from its young, fuel-efficient fleet and strategic positioning. With constrained supply growth, rising inefficiencies in aging vessels, and geopolitical disruptions boosting demand for modern tankers, Scorpio is well-placed for sustained profitability.

Its attractive valuation, strong financial position, and ability to capitalize on market dynamics reinforce the bullish outlook. As industry shortages persist, Scorpio appears poised for significant upside in the years ahead.