THL Credit Inc. (NASDAQ:TCRD) had its price objective trimmed by National Securities from $12.00 to $11.00 in a report published on Friday morning. The firm currently has a neutral rating on the investment management company’s stock.
“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. ,” the firm’s analyst wrote.
A number of other analysts have also recently commented on the stock. Jefferies Group reiterated a hold rating on shares of THL Credit in a research note on Friday, August 12th. Citigroup Inc. reduced their price target on shares of THL Credit from $11.00 to $10.00 and set a neutral rating for the company in a research report on Friday, August 12th. Deutsche Bank AG reduced their price target on shares of THL Credit from $12.25 to $12.00 and set a buy rating for the company in a research report on Thursday, August 11th. Zacks Investment Research lowered shares of THL Credit from a hold rating to a sell rating in a research report on Tuesday, August 9th. Finally, Keefe, Bruyette & Woods lowered shares of THL Credit from an outperform rating to a market perform rating and reduced their price target for the stock from $12.50 to $11.50 in a research report on Monday, August 8th. One research analyst has rated the stock with a sell rating, seven have assigned a hold rating and four have given a buy rating to the stock. The company has a consensus rating of Hold and an average target price of $11.80.
THL Credit (NASDAQ:TCRD) opened at 9.59 on Friday. The company’s 50 day moving average is $9.94 and its 200-day moving average is $10.74. THL Credit has a 12 month low of $8.58 and a 12 month high of $12.22.
THL Credit (NASDAQ:TCRD) last released its earnings results on Thursday, August 4th. The investment management company reported $0.35 EPS for the quarter, topping analysts’ consensus estimates of $0.34 by $0.01. The company earned $20.50 million during the quarter, compared to analysts’ expectations of $23.06 million. THL Credit had a negative net margin of 2.30% and a positive return on equity of 11.80%. THL Credit’s revenue for the quarter was down 13.9% on a year-over-year basis. During the same period last year, the business earned $0.35 EPS. On average, analysts forecast that THL Credit will post $1.41 earnings per share for the current fiscal year.
The business also recently declared a quarterly dividend, which will be paid on Friday, September 30th. Investors of record on Thursday, September 15th will be issued a $0.34 dividend. This represents a $1.36 annualized dividend and a yield of 14.18%. The ex-dividend date is Tuesday, September 13th. THL Credit’s payout ratio is presently -2,266.29%.
A number of large investors have recently modified their holdings of TCRD. Mckinley Capital Management LLC Delaware raised its stake in shares of THL Credit by 25.1% in the first quarter. Mckinley Capital Management LLC Delaware now owns 180,918 shares of the investment management company’s stock valued at $1,959,000 after buying an additional 36,276 shares during the last quarter. BlackRock Group LTD raised its stake in shares of THL Credit by 6.2% in the first quarter. BlackRock Group LTD now owns 146,721 shares of the investment management company’s stock valued at $1,589,000 after buying an additional 8,529 shares during the last quarter. BB&T Securities LLC raised its stake in shares of THL Credit by 244.7% in the first quarter. BB&T Securities LLC now owns 35,886 shares of the investment management company’s stock valued at $388,000 after buying an additional 25,475 shares during the last quarter. National Planning Corp raised its stake in shares of THL Credit by 12.3% in the first quarter. National Planning Corp now owns 16,000 shares of the investment management company’s stock valued at $169,000 after buying an additional 1,750 shares during the last quarter. Finally, Omega Advisors Inc. raised its stake in shares of THL Credit by 8.4% in the first quarter. Omega Advisors Inc. now owns 32,516 shares of the investment management company’s stock valued at $352,000 after buying an additional 2,516 shares during the last quarter. 42.17% of the stock is 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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