Prospect Capital Corporation (NASDAQ:PSEC) announced financial results for our third fiscal quarter ended March 31, 2015.

For the March 2015 quarter, our net investment income (“NII”) was $87.4 million or $0.24 per weighted average share. For the March 2014 quarter, our NII was $98.5 million or $0.31 per weighted average share. NII decreased by $11.1 million year-over-year on a dollars basis and decreased by $0.07 on a per share basis, driven primarily by a $0.07 per share decrease in structuring fees and a $0.02 per share increase in interest and credit facility expenses. Offsetting this decrease in income was a $0.02 per share decrease in incentive management fees. The decrease in structuring fee income was due to lower origination levels and a mix shift toward online loans (which do not generate structuring fees but which are currently delivering an expected levered yield of approximately 18%).

Our evolving origination mix has increased our percentage of recurring income with 96.7% of total investment income from interest income in the March 2015 quarter versus 82.2% in the March 2014 quarter. The recurring income portion of NII increased year-over-year by $28.6 million, or $0.03 on a per share basis.

For the March 2015 quarter, our increase in net assets resulting from operations (“NI”) was $81.5 million or $0.23 per weighted average share. For the March 2014 quarter, our NI was $82.1 million or $0.26 per weighted average share. NI was stable year-over-year on a dollars basis and decreased by $0.03 on a per share basis.

For the nine months ended March 31, 2015, our NII was $273.2 million or $0.78 per weighted average share. For the nine months ended March 31, 2014, our NII was $273.1 million or $0.95 per weighted average share. NII was stable year-over-year on a dollars basis and decreased by $0.17 on a per share basis, driven primarily by a $0.07 per share decrease in dividend income and a $0.15 per share decrease in structuring fees and a mix shift toward online loans. Offsetting this decrease in income was a $0.05 per share decrease in incentive management fees. The recurring income portion of NII increased year-over-year by $116.0 million, or $0.05 on a per share basis.

For the nine months ended March 31, 2015, our NI was $251.6 million or $0.71 per weighted average share. For the nine months ended March 31, 2014, our NI was $247.4 million or $0.86 per weighted average share. NI increased by $4.2 million year-over-year on a dollars basis and decreased by $0.15 on a per share basis.

During the December 2014 quarter, we suspended at-the-market equity issuances for the indefinite future due to then and current share price levels. This reduction in equity and asset growth has resulted in lower origination volumes compared to prior periods.

As a tax-efficient regulated investment company, our 90% minimum shareholder dividend payout requirement is based on taxable income rather than GAAP net investment income. Taxable income can decouple meaningfully from such NII. In the March 2015 quarter, we generated taxable income of $93.7 million or $0.26 per weighted average share. In the nine months ended March 31, 2015, we generated taxable income of $352.9 million or $1.00 per weighted average share, exceeding our $0.94 per share of dividends.

While regulated investment companies may utilize “spillback” dividends in the subsequent tax year to count toward prior year distribution requirements, taxable income consistently in excess of dividends enhances the possibility of future special dividends in order to maintain regulated investment company status.  (Original Source)

Shares of Prospect Capital closed today at $7.78, down $0.095 or 1.21%. PSEC has a 1-year high of $11.05 and a 1-year low of $7.42. The stock’s 50-day moving average is $8.35 and its 200-day moving average is $8.42.

On the ratings front, Prospect has been the subject of a number of recent research reports. In a report issued on February 9, Keefe analyst Greg Mason maintained a Hold rating on PSEC, with a price target of $9.50, which represents a potential upside of 20.1% from where the stock is currently trading. Separately, on the same day, Wunderlich Securities’ Merrill Ross reiterated a Buy rating on the stock and has a price target of $11.50.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Greg Mason and Merrill Ross have a total average return of 6.4% and 0.2% respectively. Mason has a success rate of 83.3% and is ranked #1590 out of 3590 analysts, while Ross has a success rate of 50.7% and is ranked #2448.

Prospect Capital Corporation is a closed-end investment company. It invests in senior and subordinated debt and equity of companies in need of capital for acquisitions, divestitures, growth, development, recapitalizations and other purposes.