Wells Fargo analyst Finian O’Shea maintained a Sell rating on SLR Investment Corp. (SLRC – Research Report) yesterday and set a price target of $12.00.
Finian O’Shea’s rating is based on a comprehensive analysis of SLR Investment Corp.’s financial position and strategic operations. O’Shea notes that while SLRC reported a net operating income (NOI) increase, which was supported by higher exit fees from a specific credit and stable credit overall, there are underlying concerns. The company’s net asset value (NAV) saw a marginal increase, and net leverage decreased slightly, indicating modest improvements. However, SLRC’s share repurchase program remained unused for the third consecutive quarter, raising questions about capital allocation efficiency and shareholder value enhancement.
Additionally, O’Shea observes that SLRC’s deployment activity has increased, but this was offset by corresponding repayments, leading to a negative look-through basis for the quarter. He points out the challenges within SLRC’s specialty finance verticals, such as a significant credit loss in one of its divisions, which could hint at potential volatility in their concentrated portfolios despite the varied origination channels. Furthermore, O’Shea’s revised earnings estimates reflect a downward adjustment for the upcoming years, maintaining an underweight rating and a price target that underscores his concerns about the stock’s future performance. This holistic view of SLRC’s operations and financial strategies led to O’Shea’s Sell rating, suggesting that investors should exercise caution.
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SLR Investment Corp. (SLRC) Company Description:
Solar Capital Ltd. is a closed-ened, externally managerd, non-diversified management investment company. The firm invests in in privately held U.S. middle-market companies. Its objective is to generate both current income and capital appreciation through debt and equity investments. The company was founded on November 2007 and is headquartered in New York, NY.
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