Apollo Investment (AINV) Given “Neutral” Rating at National Securities
National Securities reissued their neutral rating on shares of Apollo Investment (NASDAQ:AINV) in a report published on Monday morning. They currently have a $18.00 target price on the asset manager’s stock.
“▪ AINV posted NII/share of $0.46 for F4Q19, a penny above both our estimate and the quarterly dividend. With the total return hurdle taking effect, the company did not earn an incentive fee. NAV/share was up 3 cents Q/Q to $19.06 but down 3.1% on the fiscal year from $19.67. Unrealized depreciation was led by Glacier with $17.0mm, Crowne Automotive with $7.1mm, Renew Financial with $6.6mm, and Dynamic Product Tankers with $6.3mm.
▪ Apollo had another strong quarter of originations with volume of $257.4mm versus repayments and sales of $151.6mm. In April, the reduced asset coverage became effective. The company is seeking to make loans with LIBOR spreads of between 500-700 bps and attachment points of 4.0x-5.5x.
▪ AINV is likely to continue to prioritize Midcap investments and co-invest across the platform targeting verticals that have higher barriers to entry such as lender finance, asset-based lending (ABL), and life sciences. The strategy shift was apparent in the new commitments with an average spread of 585 bps and 94% done with co-investment across the Apollo platform.
▪ We think that AINV is making good progress with its portfolio rotation, but the company is still targeting 10%-15% exposure to Merx Aviation, which ended F2019 at 15.7% of the book at cost. Additionally, oil and gas still remains a significant 8.3% of the portfolio at cost. Despite strides made by Apollo, issuer and industry concentration is likely to warrant a continued discount to NAV for shares, in our opinion.
▪ We are revising our fiscal 2020 NII/share estimate to $1.83 from $1.84 and are rolling out our fiscal 2021 NII/share estimate of $1.85. We are maintaining our NEUTRAL rating and $18 price target.,” National Securities’ analyst commented.
A number of other research analysts have also recently issued reports on AINV. Zacks Investment Research cut shares of Apollo Investment from a hold rating to a sell rating in a report on Wednesday, April 3rd. ValuEngine upgraded shares of Apollo Investment from a sell rating to a hold rating in a report on Friday, May 3rd. BidaskClub cut shares of Apollo Investment from a hold rating to a sell rating in a report on Tuesday, April 9th. Finally, Citigroup upgraded shares of Apollo Investment from a sell rating to a neutral rating and reduced their price objective for the company from $15.00 to $14.00 in a report on Tuesday, January 22nd. One investment analyst has rated the stock with a sell rating, four have issued a hold rating and three have given a buy rating to the company. Apollo Investment has a consensus rating of Hold and a consensus target price of $17.40.
Apollo Investment (NASDAQ:AINV) last issued its quarterly earnings data on Thursday, May 16th. The asset manager reported $0.47 earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of $0.45 by $0.02. The firm had revenue of $61.41 million during the quarter, compared to analysts’ expectations of $64.29 million. Apollo Investment had a net margin of 28.20% and a return on equity of 9.40%. The business’s revenue was down .1% on a year-over-year basis. During the same period last year, the company earned $0.15 earnings per share. On average, equities analysts predict that Apollo Investment will post 1.85 earnings per share for the current year.
The firm also recently disclosed a quarterly dividend, which will be paid on Friday, July 5th. Stockholders of record on Thursday, June 20th will be issued a dividend of $0.45 per share. This represents a $1.80 dividend on an annualized basis and a dividend yield of 11.26%. The ex-dividend date of this dividend is Wednesday, June 19th. Apollo Investment’s dividend payout ratio is currently 99.45%.
Apollo Investment declared that its Board of Directors has initiated a share repurchase plan on Wednesday, February 6th that allows the company to buyback $50.00 million in shares. This buyback authorization allows the asset manager to repurchase up to 4.5% of its stock through open market purchases. Stock buyback plans are usually a sign that the company’s board of directors believes its shares are undervalued.
Hedge funds and other institutional investors have recently modified their holdings of the company. Advisory Services Network LLC boosted its holdings in Apollo Investment by 13.5% during the first quarter. Advisory Services Network LLC now owns 6,250 shares of the asset manager’s stock worth $95,000 after purchasing an additional 744 shares during the last quarter. Kore Private Wealth LLC purchased a new position in Apollo Investment during the first quarter worth about $32,000. IHT Wealth Management LLC boosted its holdings in Apollo Investment by 35.9% during the first quarter. IHT Wealth Management LLC now owns 17,108 shares of the asset manager’s stock worth $259,000 after purchasing an additional 4,522 shares during the last quarter. Ladenburg Thalmann Financial Services Inc. boosted its holdings in Apollo Investment by 10.7% during the first quarter. Ladenburg Thalmann Financial Services Inc. now owns 62,155 shares of the asset manager’s stock worth $942,000 after purchasing an additional 5,994 shares during the last quarter. Finally, Marshall Wace LLP purchased a new position in Apollo Investment during the first quarter worth about $1,669,000. Hedge funds and other institutional investors own 45.30% of the company’s stock.
Apollo Investment Company Profile
Apollo Investment Corporation is business development company specializing in middle market companies. It provides direct equity capital, mezzanine and senior secured loans, unsecured debt, and subordinated debt and loans. It also seeks to invest in PIPES transactions. The fund may also invest in securities of public companies that are thinly traded and may acquire investments in the secondary market and structured products.
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