Runway Growth Finance Corp (RWAY – Research Report), the Financial sector company, was revisited by a Wall Street analyst yesterday. Analyst Finian O’Shea from Wells Fargo remains neutral on the stock and has a $13.00 price target.
Finian O’Shea based his Hold rating for Runway Growth Finance Corp on a combination of factors. It appears that RWAY is doing well with their repayments, which are continuing at a high rate. However, to truly take off, they need to maintain their leverage through origination. The company’s recent Net Operating Income (NOI) was positively impacted by non-recurring income, predominantly from prepayments, which led to a reduction in leverage. Nevertheless, while beneficial in the short term, these prepayments are gradually reducing RWAY’s steady-state earning capacity. These factors indicate that the company’s financial health is stable, but it may not be positioned for significant growth in the near future.
There are also some concerns regarding RWAY’s investments and the impending exit of Oaktree, a major stakeholder. The company’s investments in publicly traded names have been concentrated and there have been write-downs in loans for certain companies. Moreover, Oaktree, which holds over half of RWAY’s stakes, has filed to register its shares for sale. While this is expected to be a smooth process that could potentially make RWAY more appealing to more investors, it may also put pressure on the stock. Additionally, even though the NOI estimates for the upcoming years have been revised upwards, the price target only slightly increased, maintaining a 14% yield on forward NOI. These elements contribute to the decision to hold the stock, indicating that it may not provide substantial returns in the immediate future.
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Runway Growth Finance Corp (RWAY) Company Description:
Runway Growth Finance Corp is a specialty finance company focused on providing senior secured loans to high-growth-potential companies in technology, life sciences, healthcare information and services, business services, select consumer services and products and other high-growth industries.
Read More on RWAY:
- Runway Growth Finance Corp. Reports Third Quarter 2023 Financial Results
- Runway Growth Finance Corp. Announces Fourth Quarter Dividend of $0.40 with $0.06 Supplemental Distribution
- Runway Growth Finance board declares supplemental dividend of 6c per share
- Runway Growth Finance Corp. Announces Date for Third Quarter 2023 Financial Results and Conference Call
- Runway Growth Finance provides Q3 portfolio update
