Weekly Investment Analysts’ Ratings Changes for Solar Capital (SLRC)
Several analysts have recently updated their ratings and price targets for Solar Capital (NASDAQ: SLRC):
5/10/2015 – Solar Capital had its “outperform” rating reaffirmed by analysts at RBC Capital. They now have a $22.00 price target on the stock, down previously from $24.00.
5/7/2015 – Solar Capital had its “hold” rating reaffirmed by analysts at Keefe, Bruyette & Woods. They now have a $20.00 price target on the stock, down previously from $21.25.
5/7/2015 – Solar Capital had its “buy” rating reaffirmed by analysts at Deutsche Bank. They now have a $24.25 price target on the stock, up previously from $24.00.
5/6/2015 – Solar Capital was downgraded by analysts at TheStreet from a “buy” rating to a “hold” rating.
5/6/2015 – Solar Capital had its “buy” rating reaffirmed by analysts at National Securities. They now have a $23.00 price target on the stock. They wrote, “1Q15 Recap: Solar Capital (SLRC) reported NII/share of $0.34 in 1Q15 versus our estimate and consensus estimate of $0.39. The earnings fell short of expectations due to the fact that Solar had substantial repayments in 4Q14 ($222.9 million) of higher yielding investments and tepid originations ($31.0 million) in 1Q15. Quarter-over-quarter all-in effective yield dropped to 9.88% from 12.09% in 4Q14. Thus despite debt costs being almost flat over this time frame NIM (net interest margin) contracted sharply to 8.49% from 10.76% in 4Q14. The bright spot for the quarter was that prepayments were a microcosm of the portfolio at a mere $6.3 million. Thus the portfolio actually experienced very modest growth of 2.2% overall despite very weak origination activity. Management remains upbeat on the company’s pipeline and outlook for their core lending business, Crystal Financial, and the life sciences venture lending. The company hired an additional investment professional for the core sponsored lending and three new professionals for the life sciences initiative, all of whom previously worked together. We anticipate that these three segments along with the PIMCO joint venture (JV) will lead to robust portfolio growth for 2015 and 2016. The company has still not utilized its credit facility with $490 million of capacity. Asset quality continues to remain strong, with only one investment on non-accrual status and no new investments placed on non-accrual. DirectBuy is the only non-accrual investment with a cost of $8.5 million or 83 bps of the portfolio at cost. We are lowering our 2015 NII/share estimate to $1.60 from $1.65 and maintaining our 2016 NII/share estimate of $1.91. Our $23 price target implies an estimated 2016 P/ NII of 12.0x, dividend yield of 7.0%, and P/NAV of 1.02x compared to the BDC sector averages of 9.1x, 10.3%, and 0.94x, respectively. “
3/18/2015 – Solar Capital is now covered by analysts at National Securities. They set a “buy” rating and a $23.00 price target on the stock. They wrote, “We are initiating coverage of Solar Capital Ltd. (SLRC) with a BUY rating and $23 price target. Solar Capital has the potential to deliver strong earnings growth over the next two years due to its low leverage, spare debt capacity, and growth levers from primary origination platforms along with its joint venture unitranche program with PIMCO (Pacific Investment Management Company) and the life sciences venture lending initiative to lend to companies that are in a middle stage of development and have significant equity cushions. We anticipate NII/share (net investment income per share) growth of 5.8% and 15.9% in 2015 and 2016, respectively. The company also has a $275 million (at cost) ownership of Crystal Financial which is an asset backed lender focused entirely on senior secured, floating rate loans and is not correlated with Solar’s primary middle market leveraged loan business. At a time when most BDCs are fully levered up and dealing with asset quality issues, Solar has nonaccruals at less than 1% of its investment portfolio at fair value and debt-to-equity (D/E) of only 0.24x with a target of 0.65x – 0.70x. The company should also be able to increase its quarterly dividend by 10% in 2016, in our opinion, as a result of strong and sustainable NII (net investment income) growth with no expected share issuances needed to fund growth. Solar has 90% of its portfolio in senior secured loans (including Crystal Financial) and earns impressive yields on its portfolio. Our $23 price target implies an estimated 2016 P/ NII of 12.1x, dividend yield of 7.0%, and P/NAV of 1.04x compared to the BDC sector averages of 9.1x, 10.2%, and 0.95x, respectively. “
Solar Capital Ltd. (NASDAQ:SLRC) traded up 0.43% during mid-day trading on Monday, hitting $18.83. 103,970 shares of the company’s stock traded hands. Solar Capital Ltd. has a 52 week low of $17.20 and a 52 week high of $21.80. The stock’s 50-day moving average is $20. and its 200-day moving average is $19.. The company has a market cap of $799.62 million and a price-to-earnings ratio of 16.66.
Solar Capital (NASDAQ:SLRC) last posted its quarterly earnings results on Tuesday, May 5th. The company reported $0.34 earnings per share for the quarter, missing the analysts’ consensus estimate of $0.39 by $0.05. Analysts expect that Solar Capital Ltd. will post $1.58 EPS for the current fiscal year.
The company also recently declared a quarterly dividend, which will be paid on Wednesday, July 1st. Shareholders of record on Thursday, June 25th will be given a dividend of $0.40 per share. This represents a $1.60 dividend on an annualized basis and a yield of 8.50%. The ex-dividend date of this dividend is Tuesday, June 23rd.
Solar Capital Ltd. is a closed-end, externally managed, non-diversified management investment company that has elected to be treated as a business development company. The Company’s investment objective is to generate both current income and capital appreciation through debt and equity investments. The Company invests primarily in leveraged middle markets companies in the form of senior secured loans, mezzanine loans and equity securities.