National Securities reaffirmed their buy rating on shares of Eagle Point Credit (NYSE:ECC) in a research report report published on Monday. They currently have a $24.00 price objective on the investment management company’s stock.
“• ECC posted NII+realized gains per share (earnings) of $0.49 for 4Q17, a penny shy of our estimate and consensus. This was a Q/Q sequential increase of 8.5% as refinances boosted the yields of additions during the quarter relative to the weighted average portfolio yield. CLO equity additions during the quarter had a weighted average effective yield of 17.25% versus a weighted average yield on the existing CLO equity portfolio at cost of 14.42%.
• ECC reset three CLOs during 4Q17 at a cost of roughly $0.05/share. As a reminder, resets involve basically restarting the reinvestment period of the CLO and over the past couple years resets typically augment the reinvestment period by 25% to 5 years from 4 years. The resets and refinances completed by Eagle Point and other CLO investors have up-front expenses now but will help to increase cash flows amidst a more challenging reinvestment environment like today. Additionally, if and when loan markets dislocate again materially ECC will have a longer reinvestment period to take advantage of this and cash-on-cash returns will be higher as borrowing costs were locked in during periods of marked complacency like the present time.
• Portfolio cash distributions (PCD) per share increased to $1.83 from $1.44. The good news on this Q/Q increase is that aside from a strong headline number increase, the composition of the cash flows is better in terms of the recurring nature of them. The company received no cash flows from inaugural distributions (which are outsized). However, we note called CLOs may have boosted this number and thus overall cash flows as well.
• We are revising our 2018 NII+realized gains/share estimate to $1.97 from $2.24. and are rolling out our 2019 NII+realized gains/share estimate of $2.28. The reason for lowering our 2018 estimates is because we are nearing the end of February without any significant credit market dislocation and as a result we have pushed back our expectations of renewed volatility to 2H18. Additionally, we expect the January 2018 equity issuance to create a temporary drag on earnings that the higher effective yields of new CLO equity additions will likely not be able to eclipse.,” National Securities’ analyst commented.
ECC has been the subject of a number of other research reports. CIBC cut their price objective on shares of Eagle Point Credit from $24.00 to $20.00 and set an outperform rating for the company in a research report on Wednesday, November 15th. Oppenheimer cut their price objective on shares of Eagle Point Credit from $24.00 to $20.00 and set an outperform rating for the company in a research report on Wednesday, November 15th. Finally, Zacks Investment Research raised shares of Eagle Point Credit from a strong sell rating to a hold rating in a research report on Tuesday, January 16th. One analyst has rated the stock with a sell rating and four have assigned a buy rating to the company’s stock. The stock currently has an average rating of Buy and an average price target of $21.13.
The firm also recently disclosed a monthly dividend, which was paid on Wednesday, February 28th. Stockholders of record on Monday, February 12th were given a dividend of $0.20 per share. This represents a $2.40 dividend on an annualized basis and a dividend yield of 13.35%. The ex-dividend date of this dividend was Friday, February 9th.
Several hedge funds have recently modified their holdings of ECC. Stifel Financial Corp bought a new stake in shares of Eagle Point Credit during the 2nd quarter valued at $215,000. Ladenburg Thalmann Financial Services Inc. grew its position in shares of Eagle Point Credit by 261.1% during the 4th quarter. Ladenburg Thalmann Financial Services Inc. now owns 13,574 shares of the investment management company’s stock valued at $255,000 after acquiring an additional 9,815 shares during the period. Wedbush Securities Inc. bought a new stake in shares of Eagle Point Credit during the 4th quarter valued at $330,000. Belpointe Asset Management LLC bought a new stake in shares of Eagle Point Credit during the 3rd quarter valued at $456,000. Finally, Ares Management LLC bought a new stake in shares of Eagle Point Credit during the 4th quarter valued at $970,000. 58.19% of the stock is owned by hedge funds and other institutional investors.
Eagle Point Credit Company Profile
Eagle Point Credit Company Inc is a non-diversified, closed-end management investment company. The Company’s primary investment objective is to generate high current income, with a secondary objective to generate capital appreciation. The Company primarily invests in equity and junior debt tranches of collateralized loan obligations (CLOs) that are collateralized by a portfolio consisting primarily of the below investment grade United States senior secured loans.
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