FS Investment Corporation’s (FSIC) Neutral Rating Reiterated at National Securities
FS Investment Corporation (NYSE:FSIC)‘s stock had its “neutral” rating reissued by equities researchers at National Securities in a research note issued on Monday. They currently have a $10.00 target price on the financial services provider’s stock. National Securities’ target price suggests a potential upside of 19.05% from the company’s previous close.
The analysts wrote, “• For 2Q17, FSIC had adjusted NII/share of $0.19 versus our estimate of $0.20 with the quarterly dividend at a rate of $0.22275/share currently. The dividend was reduced to $0.19/share for 4Q17. We had previously modeled a cut to $0.19/share in 2Q18. Beginning in 4Q17 and lasting four quarters, FSIC’s external manager will waive 25 bps of the base fee.
• While the fee waiver is good and we are happy to see the company come to terms with reality and cut the dividend, there are a few things that disappoint us with FSIC. The dividend should have been cut a while back, given the company’s increased first lien focus, general spread compression, and the fact that the dividend was only being earned with outsized prepayment fee income. The dividend should be set at a level where it can be earned with minimal to no nonrecurring fee income. With over $16 billion in AUM across the platform, we are baffled as to why FSIC won’t just follow the rest of the industry and cut the base fee to 150 bps of gross assets permanently. The company could easily cut the base fee to even 125 bps permanently and not at all impair the platform’s ability to operate as it currently does while boosting the earnings power of FSIC significantly. Lastly, with FSIC already operates in the upper middle market (UMM) can easily establish a JV to use increased leverage on lower yielding assets in the JV structure, boosting earnings significantly.
• We are revising our 2017 adjusted NII/share estimate to $0.82 from $0.84 and our 2018 NII/share estimate to $0.85 from $0.86.”
A number of other equities analysts have also weighed in on the company. BidaskClub lowered FS Investment Corporation from a “sell” rating to a “strong sell” rating in a research note on Tuesday, August 8th. Zacks Investment Research lowered FS Investment Corporation from a “buy” rating to a “hold” rating in a research note on Thursday, August 3rd. Finally, Keefe, Bruyette & Woods reiterated a “hold” rating and set a $10.00 target price on shares of FS Investment Corporation in a research note on Tuesday, July 25th. One research analyst has rated the stock with a sell rating and six have assigned a hold rating to the company’s stock. The stock presently has an average rating of “Hold” and a consensus target price of $9.80.
Shares of FS Investment Corporation (NYSE:FSIC) opened at 8.40 on Monday. The stock’s 50 day moving average price is $9.03 and its 200 day moving average price is $9.59. FS Investment Corporation has a one year low of $8.30 and a one year high of $10.80.
FS Investment Corporation (NYSE:FSIC) last announced its earnings results on Wednesday, August 9th. The financial services provider reported $0.19 earnings per share for the quarter, missing the Zacks’ consensus estimate of $0.20 by $0.01. The firm had revenue of $98.70 million for the quarter, compared to the consensus estimate of $103.14 million. FS Investment Corporation had a return on equity of 8.92% and a net margin of 59.88%. Equities research analysts anticipate that FS Investment Corporation will post $0.76 earnings per share for the current year.
In related news, CEO Michael C. Forman purchased 17,100 shares of FS Investment Corporation stock in a transaction that occurred on Thursday, August 10th. The shares were acquired at an average price of $8.41 per share, with a total value of $143,811.00. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is available through this link. Also, Director David J. Adelman purchased 11,160 shares of FS Investment Corporation stock in a transaction that occurred on Thursday, June 22nd. The shares were bought at an average cost of $8.88 per share, for a total transaction of $99,100.80. Following the transaction, the director now directly owns 34,063 shares of the company’s stock, valued at $302,479.44. The disclosure for this purchase can be found here. Insiders have purchased 55,980 shares of company stock worth $489,371 in the last three months. 1.00% of the stock is currently owned by company insiders.
A number of large investors have recently modified their holdings of the company. Advisory Services Network LLC bought a new stake in shares of FS Investment Corporation during the first quarter worth about $110,000. BDO Wealth Advisors LLC bought a new stake in shares of FS Investment Corporation during the second quarter worth about $103,000. Wayne Hummer Investments L.L.C. bought a new stake in shares of FS Investment Corporation during the first quarter worth about $112,000. BLB&B Advisors LLC bought a new stake in shares of FS Investment Corporation during the first quarter worth about $113,000. Finally, JPMorgan Chase & Co. bought a new stake in shares of FS Investment Corporation during the first quarter worth about $122,000. 32.30% of the stock is currently owned by institutional investors and hedge funds.
FS Investment Corporation Company Profile
FS Investment Corporation is an externally managed, non-diversified, closed-end management investment company. The Company’s investment objectives are to generate current income and long-term capital appreciation. Its portfolio consists primarily of investments in senior secured loans and second lien secured loans of the private United States middle market companies and subordinated loans of the private United States companies.
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