Prospect Capital Corporation (PSEC) Price Target Lowered to $5.00 at National Securities
Prospect Capital Corporation (NASDAQ:PSEC) had its price objective trimmed by National Securities from $6.00 to $5.00 in a research report released on Thursday morning. The firm currently has a sell rating on the financial services provider’s stock.
“• We have long been critical of PSEC’s accounting, specifically pertaining to structured credit. The company has two different CLO equity investments identical to Eagle Point Credit (NYSE:ECC – BUY – $21.38) and one shared with TICC Capital Corp. (NASD:TICC – SELL – $6.73) that were held by both companies from 2Q16 and through at least 1Q17. What we found is that the markets, on average, are 25.2 points higher at PSEC relative to ECC and TICC.
• As of 6/30/16, First Tower Finance Company had a subordinated term loan with 10% cash and 12% PIK which was reduced to 10% cash and 7% PIK as of 6/30/17. The 42% Y/Y PIK rate decline amazingly lead to fair value remaining at cost on the subordinated term loan and the Class A units being marked down modestly. In total, the unrealized depreciation only increased by 1.6%!
• Probes Reporter confirmed through FOIA requests the SEC inquiries and investigate actions that Prospect denied during the same time periods. PSEC claimed the SEC probes ended in December 2015 despite Probes Reporter receiving confirmation from the SEC on 1/12/16 that the company was involved with “SEC investigative activity”. Additionally, on 2/10/16 PSEC management denied any SEC investigations or inquiries and yet after Probes Reporter filed an appeal to confirm previous responses they received a letter dated 2/25/16 confirming SEC enforcement proceedings which was, to our knowledge, reconfirmed again upon another appeal dated 3/20/17 by Probes Reporter. This is egregious that it was completely undisclosed by Prospect, in our opinion, and we do not believe shareholders should continue to hold shares at any amount of above $5.
• We are accordingly lowering our price target to $5 from $6 due to the fact that we have absolutely no trust in the accounting at Prospect.,” National Securities’ analyst commented.
Several other research firms have also issued reports on PSEC. UBS AG upgraded Prospect Capital Corporation from an underperform rating to a market perform rating in a research report on Wednesday, August 30th. TheStreet lowered Prospect Capital Corporation from a b- rating to a c+ rating in a research report on Wednesday, September 27th. BidaskClub upgraded Prospect Capital Corporation from a hold rating to a buy rating in a research report on Wednesday, June 28th. Raymond James Financial, Inc. upgraded Prospect Capital Corporation from an underperform rating to a market perform rating in a research report on Wednesday, August 30th. Finally, Zacks Investment Research upgraded Prospect Capital Corporation from a sell rating to a hold rating in a research report on Wednesday, July 26th. Three analysts have rated the stock with a sell rating and four have issued a hold rating to the stock. Prospect Capital Corporation has an average rating of Hold and an average price target of $6.83.
Shares of Prospect Capital Corporation (PSEC) traded up 0.80% during mid-day trading on Thursday, hitting $6.27. The stock had a trading volume of 3,255,451 shares. Prospect Capital Corporation has a 12-month low of $6.20 and a 12-month high of $9.58. The firm’s 50-day moving average price is $6.74 and its 200 day moving average price is $7.98.
Prospect Capital Corporation (NASDAQ:PSEC) last posted its quarterly earnings results on Monday, August 28th. The financial services provider reported $0.19 earnings per share (EPS) for the quarter, missing the Thomson Reuters’ consensus estimate of $0.21 by ($0.02). Prospect Capital Corporation had a return on equity of 8.98% and a net margin of 36.08%. The company had revenue of $166.70 million during the quarter, compared to the consensus estimate of $177.21 million. During the same quarter in the prior year, the business earned $0.26 earnings per share. The firm’s revenue for the quarter was down 13.6% on a year-over-year basis. Equities analysts expect that Prospect Capital Corporation will post $0.78 earnings per share for the current fiscal year.
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The firm also recently announced a monthly dividend, which will be paid on Wednesday, November 22nd. Shareholders of record on Tuesday, October 31st will be issued a dividend of $0.06 per share. The ex-dividend date of this dividend is Monday, October 30th. This represents a $0.72 annualized dividend and a yield of 11.48%. Prospect Capital Corporation’s dividend payout ratio is presently 102.86%.
In other Prospect Capital Corporation news, CFO Brian H. Oswald bought 50,000 shares of Prospect Capital Corporation stock in a transaction on Friday, September 1st. The shares were purchased at an average cost of $6.73 per share, for a total transaction of $336,500.00. Following the completion of the acquisition, the chief financial officer now owns 493,373 shares in the company, valued at approximately $3,320,400.29. The acquisition was disclosed in a document filed with the SEC, which is accessible through this link. Insiders own 7.10% of the company’s stock.
A number of hedge funds have recently bought and sold shares of PSEC. Arrowstreet Capital Limited Partnership bought a new position in Prospect Capital Corporation during the second quarter worth about $7,697,000. California Public Employees Retirement System lifted its holdings in Prospect Capital Corporation by 1,613.1% during the first quarter. California Public Employees Retirement System now owns 746,900 shares of the financial services provider’s stock worth $6,752,000 after acquiring an additional 703,300 shares in the last quarter. Van ECK Associates Corp lifted its holdings in Prospect Capital Corporation by 21.6% during the second quarter. Van ECK Associates Corp now owns 2,307,637 shares of the financial services provider’s stock worth $18,738,000 after acquiring an additional 410,614 shares in the last quarter. PVG Asset Management Corp bought a new position in Prospect Capital Corporation during the first quarter worth about $2,872,000. Finally, Bank of Montreal Can lifted its holdings in Prospect Capital Corporation by 4.6% during the second quarter. Bank of Montreal Can now owns 5,892,500 shares of the financial services provider’s stock worth $47,847,000 after acquiring an additional 257,000 shares in the last quarter. Hedge funds and other institutional investors own 15.20% of the company’s stock.
Prospect Capital Corporation Company Profile
Prospect Capital Corporation is a financial services company. The Company primarily lends to and invests in middle market privately held companies. The Company is a closed-end investment company. Its investment objective is to generate both current income and long-term capital appreciation through debt and equity investments.
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