TICC Capital (NASDAQ:TICC) was downgraded by National Securities from a “neutral” rating to a “sell” rating in a research report issued on Monday. They currently have a $5.00 price objective on the investment management company’s stock. National Securities’ target price suggests a potential downside of 20.89% from the stock’s previous close.
The analysts wrote, “• We had previously upgraded TICC shares to NEUTRAL from SELL despite lowering our price target to $5 from $6 subsequent to the 3Q17 earnings release and 10-Q.
• With TICC shares running up significantly since this upgrade, we now feel it is necessary for us to downgrade shares to SELL from NEUTRAL.
• In 1Q17, the quarterly dividend was reduced from $0.29/share to $0.20/share. We expect the quarterly dividend to be reduced to $0.12/share in 1Q18. While we expect core NII to be above this level, we note that the company’s GAAP NII should be modestly above this new level.
• While we model estimated additional taxable income and CLO yields to improve significantly Y/Y for 2018 as we expect renewed loan market volatility and lower reset and refinance costs not eating into core earnings as much, we note that TICC will want to preserve as much NAV as possible as the volatility should materially lower NAV/share despite boosting earnings.
• Our biggest contention with TICC has been, and continues to be, that the company has increasingly put 2nd lien club deals in its portfolio and maintained a heavy CLO equity concentration. The market has demonstrated repeatedly that it discounts BDCs holding CLO equity, while pure play structured credit vehicles get consistent NAV premiums. When NAV declines during the volatility we model, the market will likely sell shares off heavily despite increased cash flow economics.
• While we do not value any BDC or RIC off yield, it would make sense that our $5 target implies a forward yield of 9.6% which is adequate for CLO equity and higher yielding 2nd lien club deals, in our opinion.
• We are making no changes to our core NII/share estimate for 2017 of $0.78 and our 2018 core NII/share estimate of $0.95.”
Several other equities research analysts have also recently weighed in on TICC. TheStreet raised TICC Capital from a “c+” rating to a “b” rating in a research note on Thursday, September 7th. ValuEngine cut TICC Capital from a “buy” rating to a “hold” rating in a research note on Thursday, November 2nd. Ladenburg Thalmann Financial Services raised TICC Capital from a “neutral” rating to a “buy” rating in a research note on Monday, November 6th. Finally, Zacks Investment Research cut TICC Capital from a “hold” rating to a “sell” rating in a research note on Wednesday, November 8th. Five investment analysts have rated the stock with a sell rating and two have given a buy rating to the company. The stock currently has a consensus rating of “Hold” and a consensus price target of $5.50.
TICC Capital (NASDAQ:TICC) last posted its earnings results on Thursday, November 2nd. The investment management company reported $0.13 earnings per share (EPS) for the quarter, missing the Thomson Reuters’ consensus estimate of $0.16 by ($0.03). TICC Capital had a net margin of 94.98% and a return on equity of 7.64%. The business had revenue of $14.50 million for the quarter, compared to analysts’ expectations of $15.97 million. During the same period last year, the firm posted $0.30 earnings per share. TICC Capital’s quarterly revenue was down 19.9% on a year-over-year basis. analysts forecast that TICC Capital will post 0.57 earnings per share for the current fiscal year.
In related news, CEO Jonathan H. Cohen bought 7,068 shares of the business’s stock in a transaction dated Monday, November 20th. The shares were purchased at an average cost of $6.07 per share, with a total value of $42,902.76. The purchase was disclosed in a filing with the Securities & Exchange Commission, which is available at this hyperlink. Also, COO Saul B. Rosenthal bought 8,485 shares of the business’s stock in a transaction dated Wednesday, November 15th. The stock was bought at an average cost of $6.03 per share, for a total transaction of $51,164.55. The disclosure for this purchase can be found here. Over the last three months, insiders bought 141,700 shares of company stock worth $843,621. Insiders own 5.90% of the company’s stock.
Several hedge funds and other institutional investors have recently added to or reduced their stakes in TICC. Muzinich & Co. Inc. grew its stake in shares of TICC Capital by 629.5% in the first quarter. Muzinich & Co. Inc. now owns 1,439,532 shares of the investment management company’s stock worth $10,624,000 after acquiring an additional 1,242,211 shares during the last quarter. Raging Capital Management LLC lifted its holdings in shares of TICC Capital by 19.3% during the fourth quarter. Raging Capital Management LLC now owns 2,930,018 shares of the investment management company’s stock valued at $17,815,000 after purchasing an additional 474,275 shares in the last quarter. Bank of Montreal Can bought a new position in shares of TICC Capital during the second quarter valued at $2,390,000. Putnam Investments LLC bought a new position in shares of TICC Capital during the fourth quarter valued at $1,782,000. Finally, UBS Group AG lifted its holdings in shares of TICC Capital by 20.4% during the first quarter. UBS Group AG now owns 1,399,942 shares of the investment management company’s stock valued at $10,332,000 after purchasing an additional 237,193 shares in the last quarter. 16.17% of the stock is currently owned by hedge funds and other institutional investors.
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TICC Capital Company Profile
TICC Capital Corp. is a closed-end, non-diversified management investment company. The Company’s investment objective is to maximize its portfolio’s total return. The Company primarily focuses on seeking current income by investing primarily in corporate debt securities. The Company’s debt investments may include syndicated loans and bilateral loans.
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