Fifth Street Finance (OCSL) Stock Rating Lowered by National Securities
Fifth Street Finance (NASDAQ:OCSL) was downgraded by research analysts at National Securities from a “buy” rating to a “neutral” rating in a research note issued on Friday. They currently have a $5.00 price target on the credit services provider’s stock, down from their prior price target of $7.00. National Securities’ target price would indicate a potential upside of 3.73% from the company’s previous close.
The analysts wrote, “• Oaktree posted NII/share of $0.08 for fiscal 4Q17, short of our $0.13/share estimate and the $0.125/share dividend. Notably, interest income was down substantially Q/Q to $31.4 million from $38.8 million and we expect the increase in non-accruals at cost drove the majority of the decline although the portfolio at cost decreased by $132.2 million.
• Non-accruals at amortized cost (which includes PIK non-accruals) jumped to $255.2 million from $190.5 million linked Q/Q or to 14.5% of the portfolio at amortized cost from 10.1%. Two new portfolio companies were added to non-accrual status during the quarter: Ameritox and Advanced Pain Management while previous non-accrual ERS Acquisition Corp. was restructured mostly in-line with the 6/30/17 mark at a realized loss of around $34.0 million.
• Although the same dividend was declared for the 12/31/17 quarter, management gave some rather opaque guidance on the dividend going forward. We assume that the part 1 incentive fee is not earned until fiscal 4Q18 but nonetheless think the run rate of NII/share will be $0.10 and force a dividend reduction to $0.09/share beginning in the quarter ending 3/31/18.
• We are revising our fiscal 2018 NII/share estimate to $0.41 from $0.56 and are rolling out our fiscal 2019 NII/share estimate of $0.40. “
Several other brokerages have also recently weighed in on OCSL. ValuEngine raised shares of Fifth Street Finance from a “buy” rating to a “strong-buy” rating in a research note on Friday, September 1st. Zacks Investment Research cut Fifth Street Finance from a “hold” rating to a “sell” rating in a research report on Tuesday, October 10th. BMO Capital Markets reiterated a “hold” rating and issued a $4.00 price objective on shares of Fifth Street Finance in a report on Friday, October 6th. J P Morgan Chase & Co boosted their price objective on Fifth Street Finance from $5.50 to $6.00 and gave the stock a “neutral” rating in a research note on Wednesday, November 1st. Finally, BidaskClub raised shares of Fifth Street Finance from a “hold” rating to a “buy” rating in a research report on Wednesday, October 4th. One research analyst has rated the stock with a sell rating, six have given a hold rating and five have issued a buy rating to the company. The company presently has an average rating of “Hold” and an average target price of $5.63.
Fifth Street Finance (NASDAQ:OCSL) last posted its quarterly earnings results on Wednesday, November 29th. The credit services provider reported $0.08 earnings per share (EPS) for the quarter, missing the Zacks’ consensus estimate of $0.13 by ($0.05). Fifth Street Finance had a positive return on equity of 8.27% and a negative net margin of 37.21%. sell-side analysts predict that Fifth Street Finance will post 0.56 earnings per share for the current year.
In other Fifth Street Finance news, major shareholder Leonard M. Tannenbaum sold 1,409,606 shares of the firm’s stock in a transaction that occurred on Thursday, October 19th. The shares were sold at an average price of $5.56, for a total value of $7,837,409.36. The transaction was disclosed in a document filed with the SEC, which can be accessed through the SEC website. Also, CEO Bernard D. Berman sold 20,000 shares of the firm’s stock in a transaction that occurred on Friday, September 29th. The stock was sold at an average price of $5.43, for a total transaction of $108,600.00. Following the completion of the transaction, the chief executive officer now directly owns 35,968 shares in the company, valued at $195,306.24. The disclosure for this sale can be found here. 0.14% of the stock is currently owned by company insiders.
A hedge fund recently bought a new stake in Fifth Street Finance stock. Hillsdale Investment Management Inc. purchased a new position in shares of Fifth Street Finance Corp. (NASDAQ:OCSL) during the third quarter, according to its most recent filing with the Securities and Exchange Commission (SEC). The fund purchased 23,600 shares of the credit services provider’s stock, valued at approximately $129,000. Hedge funds and other institutional investors own 35.21% of the company’s stock.
Fifth Street Finance Company Profile
Oaktree Specialty Lending Corporation, formerly Fifth Street Finance Corp., is a specialty finance company. The Company is a closed-end, non-diversified management investment company. The Company acts as a business development company (BDC). The Company’s investment objective is to maximize its portfolio’s total return by generating current income from its debt investments, and capital appreciation from its equity investments.
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