THL Credit’s (TCRD) “Neutral” Rating Reiterated at National Securities
THL Credit (NASDAQ:TCRD)‘s stock had its “neutral” rating reissued by equities researchers at National Securities in a report issued on Tuesday. They currently have a $10.00 target price on the investment management company’s stock. National Securities’ price target points to a potential upside of 21.21% from the company’s previous close.
The analysts wrote, “ TCRD earned NII/share of $0.31 for 2Q18, above our estimate of $0.28 and the quarterly dividend of $0.27. The beat was primarily driven by prepayment-related income as accretion of discounts and other fees increased to $1.2 million from $700,000 Q/Q and prepayment premiums increased to $300,000 from $100,00.
Non-accruals at cost decreased to $9.7 million or 1.7% of the portfolio from $42.6 million or 6.7% of the portfolio. Charming Charlie, Aerogroup, and Specialty Brands all came off non-accrual although the two remaining non-accruals, Tri Starr and Loadmaster Derrick, were marked down slightly more Q/Q.
Non-sponsor investments still comprise 15% of the portfolio and as a result we think that this will keep the valuation of shares muted even if no further non-accruals pop up until these legacy investments eventually roll off or get sold. We think that NAV/share will decrease to $10.07 at the end of 2018 before stabilizing through 2H19 to finish the year at $10.04.
When these investments do roll off or are sold which we expect to be largely complete by the end of 1H19, we expect the yield on on-balance sheet investments to decline. However, an offset to the decline in yield we model from fewer legacy investments and more of a first lien focus should be increases in the Logan JV which finished 6/30/18 at 15.0% of the portfolio at cost and a yield of 14.4%. We expect Logan to comprise 18.4% of the portfolio at cost in 4Q18 and 28.4% in 4Q19. We model the quarterly dividend to be cut to $0.23/share from $0.27/share in 3Q19 upon resumption of the incentive fee.
We are revising 2018 NII/share estimate to $1.13 from $1.12 and our 2019 NII/share estimate to $1.04 from $1.05. We are maintaining our NEUTRAL rating and our $10 price target.”
A number of other research analysts also recently commented on TCRD. ValuEngine downgraded shares of THL Credit from a “hold” rating to a “sell” rating in a research report on Wednesday, May 2nd. Zacks Investment Research downgraded shares of THL Credit from a “buy” rating to a “hold” rating in a research report on Wednesday, May 9th. Finally, BidaskClub downgraded shares of THL Credit from a “sell” rating to a “strong sell” rating in a research report on Saturday, May 12th. One analyst has rated the stock with a sell rating and six have issued a hold rating to the company. The company has an average rating of “Hold” and an average target price of $9.85.
THL Credit (NASDAQ:TCRD) last announced its quarterly earnings data on Wednesday, August 8th. The investment management company reported $0.31 EPS for the quarter, beating the Zacks’ consensus estimate of $0.27 by $0.04. THL Credit had a negative net margin of 8.89% and a positive return on equity of 11.15%. The firm had revenue of $18.36 million for the quarter, compared to the consensus estimate of $16.92 million. equities research analysts predict that THL Credit will post 1.13 EPS for the current year.
In other THL Credit news, CFO Terrence W. Olson bought 56,409 shares of THL Credit stock in a transaction on Thursday, July 5th. The stock was purchased at an average cost of $8.18 per share, for a total transaction of $461,425.62. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through this hyperlink. Also, CFO Terrence W. Olson bought 13,518 shares of THL Credit stock in a transaction on Monday, July 9th. The stock was acquired at an average price of $8.23 per share, with a total value of $111,253.14. The disclosure for this purchase can be found here. Insiders acquired 482,498 shares of company stock valued at $3,862,689 over the last quarter. Corporate insiders own 0.46% of the company’s stock.
Hedge funds and other institutional investors have recently bought and sold shares of the business. Susquehanna Fundamental Investments LLC acquired a new stake in THL Credit in the first quarter valued at approximately $105,000. Citadel Advisors LLC acquired a new stake in THL Credit in the second quarter valued at approximately $108,000. Dynamic Technology Lab Private Ltd acquired a new stake in THL Credit in the first quarter valued at approximately $112,000. Citigroup Inc. lifted its stake in THL Credit by 1,316.0% in the first quarter. Citigroup Inc. now owns 15,576 shares of the investment management company’s stock valued at $121,000 after acquiring an additional 14,476 shares during the last quarter. Finally, Trexquant Investment LP lifted its stake in THL Credit by 119.4% in the first quarter. Trexquant Investment LP now owns 23,416 shares of the investment management company’s stock valued at $182,000 after acquiring an additional 12,745 shares during the last quarter. Hedge funds and other institutional investors own 44.64% of the company’s stock.
THL Credit Company Profile
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 lower middle market companies.
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