Cantor analyst David Chiaverini weighed in today with a few insights on Prospect Capital Corporation (NASDAQ:PSEC), after the company released its fiscal fourth-quarter results, posting net operating income of $0.25 per share, which was ahead of Chiaverini’s estimate by a penny and in line with consensus.
Chiaverini wrote, “We view these results positively. Improved credit quality, flat book value, and most importantly the execution of its stock repurchase plan all make for a good quarter. Our HOLD rating is based on our belief that the company’s dividend may be cut following the contemplated spin-offs of its structured credit business, online lending business, and real estate business. Despite these corporate actions tempering our rating view, we like the company’s efficient use of its nonqualifying investment bucket and asset-sensitive balance sheet.”
“The company repurchased 4.2 million shares at an average price of $7.22 per share at the end of July through mid-August. We view this very favorably as these purchases occurred at an average discount to NAV of 30%. Despite this relatively low level of repurchase activity (~$30 million), it results in a pro forma book value of $10.35, up from $10.31, and demonstrates the benefits of even small amounts of stock repurchases,” the analyst added.
Chiaverini reiterated a Hold rating on Prospect Capital shares, with an $8.00 price target, which represents a potential upside of 7.5% from where the stock is currently trading.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst David Chiaverini has a total average return of 5.2% and a 45.8% success rate. Chiaverini has a -5.7% average return when recommending PSEC, and is ranked #1136 out of 3734 analysts.
Out of the 5 analysts polled by TipRanks, 4 rate Prospect Capital Corp. stock a Buy, while 1 rates the stock a Hold. With a return potential of 42.5%, the stock’s consensus target price stands at $10.60.