MLV Maintains Buy On Prospect Capital, Sees 21% Upside

MLV analyst Christopher Nolan maintained a Buy rating on Prospect Capital Corp. (NASDAQ:PSEC) with a $11.50 price target, which represents a potential upside of 21% from where the stock is currently trading.

Nolan said, “PSEC reported fiscal 1Q15 net investment income EPS of $0.28, in-line with our estimate and consensus. At first look, revenues were above our expectations but were offset by higher-than-expected operating expenses. While quarterly net investment income still does not cover the $0.33/share quarterly dividend, we think the dividend remains secure through June 2015. Going forward, management has announced their intent to spin off some of its businesses to shareholders. They plan to spin-off 3 “pure-play” entities centering on PSEC’s CLO business, its online lending business, and its real estate business. Conceptually, we think this is a positive development to free up balance sheet capacity for higher-yielding assets and thus potentially improve dividend coverage, but more details are needed.”

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Christopher Nolan has a total average return of 6.9% and a 75.0% success rate. Nolan has a -2.5% average return when recommending PSEC, and is ranked #1910 out of 3364 analysts.

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