Buy Rating Affirmed for Pennantpark Floating Rate Capital with Strong Growth and Valuation Upside

JMP Securities analyst Brian McKenna reiterated a Buy rating on Pennantpark $ (PFLT – Research Report) today and set a price target of $12.50.

Brian McKenna has given his Buy rating due to a combination of factors that indicate a strong financial standing and positive growth trends for Pennantpark Floating Rate Capital Ltd. (PFLT). The company has reported an increase in its net asset value (NAV), which has grown by 1.7% sequentially to an estimated mid-point of $11.37 to $11.42. Additionally, the company’s investment portfolio has seen a notable 16.5% increase sequentially, following a 19% increase in the prior quarter. Despite a slight decline in net investment income (NII) and core NII, the overall credit trends remain healthy and the portfolio’s non-accrual status is minimal, underscoring solid underlying financial health.

Moreover, Brian McKenna’s confidence is bolstered by the robust growth in the investment portfolio, which has expanded nearly 40% over the past two quarters, setting a strong foundation for potential NII growth in the second half of the fiscal year 2024. The stock’s current trading value below book value, despite the positive trajectory of fundamentals, presents an attractive investment opportunity, as per McKenna’s analysis. His maintained Market Outperform rating and $12.50 price target reflect a required yield of approximately 10% on the next twelve months’ core dividend estimate, suggesting potential for a favorable return on investment.

McKenna covers the Financial sector, focusing on stocks such as KKR & Co, Blue Owl Capital, and SuRo Capital. According to TipRanks, McKenna has an average return of 30.3% and a 76.92% success rate on recommended stocks.

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Pennantpark $ (PFLT) Company Description:

PennantPark Floating Rate Capital Ltd. is a closed-end, externally managed, non-diversified investment company. It invests primarily in loans bearing a variable-rate of interest or floating rate loans, and other investments made to U.S. middle-market companies. The company was founded by Arthur Howard Penn on October 28, 2010 and is headquartered in New York, NY.