FS Investment Corp.’s (FSIC) Neutral Rating Reaffirmed at National Securities
FS Investment Corp. (NYSE:FSIC)‘s stock had its “neutral” rating reaffirmed by stock analysts at National Securities in a research note issued to investors on Friday. They presently have a $9.00 price objective on the stock. National Securities’ target price would indicate a potential downside of 7.22% from the company’s current price.
The analysts wrote, “3Q16 Recap: FS Investment Corporation (FSIC) reported adjusted NII/share of $0.20 for 3Q16 versus our estimate of $0.21 and consensus estimates of $0.22. Fee income, which is largely driven by prepayments, was down to $4.2 million from $15.3 million the quarter prior. Management still maintains that FSIC will earn the dividend on an adjusted NII basis for 2016 due to increased fee income during 4Q16 although we prefer to see dividends covered with little to no fees. Despite the earnings pressure we forecast we do not expect a dividend reduction in 2017. NAV/share was up 2.7% Q/Q from unrealized appreciation due to improvements at underlying portfolio companies and asset quality remains strong with non-accruals 2.0% of the portfolio at amortized cost. We expect the portfolio at fair value will increase modestly from 3Q16 levels by year-end 2016 and year-end 2017 although effective yield and NIM (net investment margin) will likely decrease in both 2016 and 2017 from prior years as competition remains fierce. We are maintaining our 2016 adjusted NII/share estimate of $0.89 and are revising our 2017 adjusted NII/share estimate from $0.90 to $0.93. We are reiterating our NEUTRAL rating and $9 price target. Our $9 price target implies an estimated 2017 P/NII (Price/NII) of 9.7x, dividend yield of 9.9%, and P/NAV (Price/NAV) of 0.91x compared to the BDC sector averages of 9.6x, 10.0%, and 0.87x, respectively. “
A number of other research firms have also recently commented on FSIC. Barclays PLC cut shares of FS Investment Corp. from an “overweight” rating to an “equal weight” rating and decreased their target price for the stock from $10.00 to $9.00 in a research note on Wednesday, September 7th. DA Davidson restated a “buy” rating and set a $10.00 target price on shares of FS Investment Corp. in a research note on Saturday, August 13th. TheStreet cut shares of FS Investment Corp. from a “buy” rating to a “hold” rating in a research note on Thursday, September 29th. Zacks Investment Research cut shares of FS Investment Corp. from a “hold” rating to a “sell” rating in a research note on Thursday, August 11th. Finally, JPMorgan Chase & Co. raised their target price on shares of FS Investment Corp. from $9.00 to $9.50 and gave the stock a “neutral” rating in a research note on Thursday, August 11th. One analyst has rated the stock with a sell rating, five have issued a hold rating and three have issued a buy rating to the company. FS Investment Corp. has a consensus rating of “Hold” and an average price target of $9.75.
FS Investment Corp. (NYSE:FSIC) opened at 9.70 on Friday. The company’s 50-day moving average is $9.42 and its 200-day moving average is $9.30. FS Investment Corp. has a 52 week low of $7.11 and a 52 week high of $10.05.
FS Investment Corp. (NYSE:FSIC) last posted its quarterly earnings data on Wednesday, November 9th. The company reported $0.20 earnings per share (EPS) for the quarter, missing analysts’ consensus estimates of $0.22 by $0.02. FS Investment Corp. had a return on equity of 9.79% and a net margin of 38.26%. On average, analysts anticipate that FS Investment Corp. will post $0.96 earnings per share for the current fiscal year.
The firm also recently declared a quarterly dividend, which will be paid on Wednesday, January 4th. Investors of record on Wednesday, December 21st will be given a $0.2228 dividend. This represents a $0.89 annualized dividend and a yield of 9.19%. The ex-dividend date of this dividend is Monday, December 19th. FS Investment Corp.’s dividend payout ratio is presently 130.88%.
Large investors have recently made changes to their positions in the company. Tealwood Asset Management Inc. acquired a new stake in shares of FS Investment Corp. during the third quarter valued at $100,000. Sumitomo Mitsui Trust Holdings Inc. boosted its stake in shares of FS Investment Corp. by 4.5% in the second quarter. Sumitomo Mitsui Trust Holdings Inc. now owns 11,508 shares of the company’s stock valued at $104,000 after buying an additional 498 shares in the last quarter. Paragon Capital Management Ltd boosted its stake in shares of FS Investment Corp. by 8.0% in the third quarter. Paragon Capital Management Ltd now owns 11,027 shares of the company’s stock valued at $104,000 after buying an additional 818 shares in the last quarter. Telos Capital Management Inc. acquired a new stake in shares of FS Investment Corp. during the third quarter valued at $108,000. Finally, Partnervest Advisory Services LLC boosted its stake in shares of FS Investment Corp. by 5.0% in the second quarter. Partnervest Advisory Services LLC now owns 12,097 shares of the company’s stock valued at $109,000 after buying an additional 579 shares in the last quarter. Institutional investors own 30.96% of the company’s stock.
About FS Investment Corp.
FS Investment Corporation is an externally managed, non-diversified, closed-end management investment company. The Company’s investment objectives are to generate current income and long-term capital appreciation. Its portfolio consists primarily of investments in senior secured loans and second lien secured loans of the private United States middle market companies and subordinated loans of the private United States companies.
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