Main Street Capital (MAIN) Price Target Raised to $38.00
Main Street Capital (NYSE:MAIN) had its target price hoisted by National Securities from $35.00 to $38.00 in a research note published on Wednesday morning. They currently have a neutral rating on the financial services provider’s stock.
“ MAIN earned NII/share of $0.66 versus our estimate of $0.61 and the quarterly regular dividend of $0.57 which was increased to $0.59/share for 4Q18. Management guided towards lower dividend income going forward and while we think earnings will be lower than 2Q18 levels they will likely be high enough on a recurring basis to permit two more base dividend increases during 2019, in our opinion.
NAV/share was up again to $23.96 from $23.68 the quarter prior. We expect industry-leading economic returns for MAIN of 15.1% and 14.0% for 2018 and 2019, respectively. Main Street trades at such a high NAV premium that its equity issuances, even while done on a measured, flow basis, are highly accretive to both NAV and NII.
Main Street’s asset quality continues to remain strong with non-accruals at cost totaling $76.3 million or 3.4% of the portfolio at cost, up from $70.4 million or 3.2% of the portfolio the quarter prior. Marine Shelters and CapFusion were removed from non-accrual status but Datacom, with a total cost of $21.5 million, was added to non-accrual during the quarter.
The LMM focus of MAIN bodes well for effective yield and NIM, both of which have held up remarkably well despite the spread compression seen across the middle market. The spread between LMM and MM loans was 300 bps in 2Q18, unchanged the past three quarters. While we expect MAIN to continue to prioritize capital allocation to the LMM, the company also has the optionality to make loans to larger EBITDA borrowers in MM and private loans.
We are revising our 2018 NII/share estimate to $2.55 from $2.49 and our 2019 NII/share estimate to $2.66 from $2.57 and maintaining our NEUTRAL rating but increasing our price target to $38 from $35.,” the firm’s analyst commented.
Several other equities research analysts also recently issued reports on MAIN. ValuEngine downgraded Main Street Capital from a buy rating to a hold rating in a report on Wednesday, April 11th. Zacks Investment Research downgraded Main Street Capital from a buy rating to a hold rating in a report on Tuesday, May 1st. Finally, SunTrust Banks reiterated a hold rating and issued a $40.00 price objective on shares of Main Street Capital in a report on Friday, August 3rd. One research analyst has rated the stock with a sell rating, five have assigned a hold rating and one has issued a buy rating to the company. Main Street Capital currently has an average rating of Hold and a consensus price target of $40.25.
Main Street Capital (NYSE:MAIN) last posted its quarterly earnings data on Thursday, August 2nd. The financial services provider reported $0.66 earnings per share (EPS) for the quarter, beating the Thomson Reuters’ consensus estimate of $0.62 by $0.04. The firm had revenue of $59.87 million for the quarter, compared to the consensus estimate of $57.88 million. Main Street Capital had a return on equity of 11.81% and a net margin of 83.40%. The company’s quarterly revenue was up 19.1% compared to the same quarter last year. During the same quarter in the previous year, the business earned $0.58 EPS. research analysts predict that Main Street Capital will post 2.58 EPS for the current fiscal year.
A number of hedge funds and other institutional investors have recently modified their holdings of MAIN. CNO Financial Group Inc. increased its holdings in Main Street Capital by 114.3% during the 2nd quarter. CNO Financial Group Inc. now owns 300,000 shares of the financial services provider’s stock worth $11,418,000 after purchasing an additional 160,000 shares during the period. Millennium Management LLC purchased a new stake in Main Street Capital during the 1st quarter worth about $5,193,000. Cornerstone Wealth Management LLC purchased a new stake in Main Street Capital during the 2nd quarter worth about $2,392,000. Opus Capital Group LLC purchased a new position in shares of Main Street Capital in the 1st quarter valued at about $1,736,000. Finally, JPMorgan Chase & Co. increased its holdings in shares of Main Street Capital by 1,604.9% in the 1st quarter. JPMorgan Chase & Co. now owns 44,584 shares of the financial services provider’s stock valued at $1,644,000 after acquiring an additional 41,969 shares during the last quarter. Institutional investors own 25.24% of the company’s stock.
Main Street Capital Company Profile
Main Street Capital Corporation is a business development company specializing in long- term equity and debt investments in small and lower middle market companies. The firm focuses on investments in, subordinated loans, private equity, venture debt, mezzanine investments, mature, mid venture, industry consolidation, later stage, late venture, emerging growth, management buyouts, change of control transactions, ownership transitions, recapitalizations, strategic acquisitions, refinancing, business expansion capital, growth financings, family estate planning, and other growth initiatives primarily for later stage businesses.
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