National Securities Trims THL Credit Inc. (TCRD) Target Price to $11.00
THL Credit Inc. (NASDAQ:TCRD) had its price target cut by investment analysts at National Securities from $12.00 to $11.00 in a report issued on Friday. The firm presently has a “neutral” rating on the investment management company’s stock. National Securities’ price objective would suggest a potential upside of 14.46% from the company’s current price.
The analysts wrote, “Revisiting Estimates: THL Credit (TCRD) has had a rough first half of 2016 thus far with NAV/share declining 5.5% and non-accruals, as of 6/30/16, reaching 7.6% of the portfolio at amortized cost. While the look-back feature in the incentive fee structure has enabled the company to post NII/share in excess of the $0.34/share dividend through the first two quarters, we think that as the company works out problem assets and reinvests its portfolio that effective yields will largely be lower and that a dividend cut to $0.31/share in 1Q17 is likely. We expect NIM to decline to 9.83% in 2016 from 10.44% in 2015 before improving to 10.58% in 2017 with the continued ramping of the Logan JV (joint venture) and improved credit performance driving our expectations of improvement. We anticipate NAV/share will decrease further to $11.53 in 4Q16 from $11.88 in 2Q16 before we model an improvement to $11.73 in 4Q17. THL is likely to continue to repurchase its shares given the 19% NAV/share discount as it recycles its portfolio and keeps leverage relatively flat through 2016 and 2017. With D/E (debt-to-equity) of 0.77x in 2Q16 and an upper band target of 0.80x we think repurchase activity will be modest, especially with the risk of further NAV decreases potentially pushing leverage up further. We are revising our 2016 NII/share estimate to $1.42 from $1.46 and our 2017 NII/share estimate to $1.31 from $1.43. Accordingly, we are reducing our price target to $11 from $12. Our $11 price target implies an estimated 2017 Price/Net Investment Income (P/NII) of 8.4x, dividend yield of 12.4%, and Price/Net Asset Value (P/NAV) of 0.94x compared to the BDC sector averages of 9.1x, 10.4%, and 0.91x, respectively. “
Several other research analysts have also recently weighed in on TCRD. JMP Securities cut shares of THL Credit from a “mkt outperform” rating to a “market perform” rating in a research report on Thursday, June 2nd. Janney Montgomery Scott started coverage on shares of THL Credit in a research report on Friday, June 17th. They set a “neutral” rating and a $12.00 price target on the stock. TheStreet raised shares of THL Credit from a “hold” rating to a “buy” rating in a research report on Monday, July 11th. Wells Fargo & Co. cut shares of THL Credit from an “outperform” rating to a “market perform” rating in a research report on Friday, August 5th. Finally, Keefe, Bruyette & Woods cut shares of THL Credit from an “outperform” rating to a “market perform” rating and lowered their price target for the company from $12.50 to $11.50 in a research report on Monday, August 8th. One analyst has rated the stock with a sell rating, seven have issued a hold rating and four have issued a buy rating to the stock. THL Credit currently has a consensus rating of “Hold” and a consensus target price of $11.80.
THL Credit (NASDAQ:TCRD) opened at 9.61 on Friday. The firm’s 50-day moving average is $10.05 and its 200-day moving average is $10.74. THL Credit has a 52-week low of $8.58 and a 52-week high of $12.22.
THL Credit (NASDAQ:TCRD) last announced its earnings results on Thursday, August 4th. The investment management company reported $0.35 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.34 by $0.01. THL Credit had a negative net margin of 2.30% and a positive return on equity of 11.80%. The company had revenue of $20.50 million for the quarter, compared to analysts’ expectations of $23.06 million. During the same quarter in the previous year, the company posted $0.35 EPS. The firm’s quarterly revenue was down 13.9% on a year-over-year basis. On average, equities analysts anticipate that THL Credit will post $1.41 earnings per share for the current year.
The business also recently announced a quarterly dividend, which will be paid on Friday, September 30th. Shareholders of record on Thursday, September 15th will be given a $0.34 dividend. The ex-dividend date of this dividend is Tuesday, September 13th. This represents a $1.36 dividend on an annualized basis and a yield of 14.15%. THL Credit’s payout ratio is currently -2,266.29%.
Hedge funds and other institutional investors have recently bought and sold shares of the stock. Mckinley Capital Management LLC Delaware boosted its position in THL Credit by 15.6% in the second quarter. Mckinley Capital Management LLC Delaware now owns 209,134 shares of the investment management company’s stock worth $2,328,000 after buying an additional 28,216 shares during the last quarter. BB&T Securities LLC raised its stake in shares of THL Credit by 3.7% in the second quarter. BB&T Securities LLC now owns 37,216 shares of the investment management company’s stock worth $414,000 after buying an additional 1,330 shares during the period. Emerald Acquisition Ltd. acquired a new stake in shares of THL Credit during the second quarter worth about $561,000. Silver Capital Management LLC raised its stake in shares of THL Credit by 9.4% in the second quarter. Silver Capital Management LLC now owns 61,663 shares of the investment management company’s stock worth $686,000 after buying an additional 5,311 shares during the period. Finally, Sumitomo Mitsui Asset Management Company LTD raised its stake in shares of THL Credit by 44.2% in the second quarter. Sumitomo Mitsui Asset Management Company LTD now owns 63,048 shares of the investment management company’s stock worth $701,000 after buying an additional 19,321 shares during the period. 42.17% of the stock is currently owned by institutional investors.
About THL Credit
THL Credit, Inc is an externally managed, non-diversified closed-end management investment company. The Company’s investment objective is to generate both current income and capital appreciation, primarily through investments in privately negotiated debt and equity securities of middle market companies.
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