Medley Capital (MCC) Stock Rating Reaffirmed by National Securities
Medley Capital (NYSE:MCC)‘s stock had its “neutral” rating reiterated by equities research analysts at National Securities in a research report issued on Thursday. They currently have a $6.00 price target on the investment management company’s stock. National Securities’ price target would suggest a potential upside of 4.35% from the stock’s previous close.
The analysts wrote, “• MCC posted NII/share of $0.16 for fiscal 4Q17, matching the dividend but falling 2 cents short of our estimate. The company did not earn an incentive fee for the third quarter in a row given the NAV decline and lookback feature of the incentive fee structure and we do not anticipate the company to earn an incentive fee through fiscal 2018.
• We expect NII/share to exceed the dividend by a penny per share on average through fiscal 2018 and 2019 but we note that with MCC generally recognizing origination fees up-front as opposed to amortizing them over the expected life of the loan the company is on somewhat of a hamster wheel to ensure earnings do not decline materially if origination volume slows. We think this is a significant risk, especially in a challenging loan market, and will likely be at least part of the reason for the stock to continue to trade at a heavily discounted NAV multiple and such a high yield even as an imminent dividend reduction does not seem to be in the cards.
• Medley continues to earn a 175 bps base fee on gross assets and 150 bps on gross assets over $1 billion. Despite very poor performance, MCC remains a higher fee vehicle and we do not think investors will buy MCC relative to peers with better performance and lower fees, even if those peers are more expensive on a NAV basis. Additionally, the company did not seem too keen on repurchasing shares despite a discount to NAV of more than 30%. We think this is less than optimal capital management and that repurchases could be highly accretive for NAV.
• We are revising our fiscal 2018 NII/share estimate to $0.69 from $0.72 and are rolling out our fiscal 2019 NII/share estimate of $0.67. “
MCC has been the topic of a number of other reports. Zacks Investment Research downgraded Medley Capital from a “hold” rating to a “strong sell” rating in a research report on Wednesday, October 4th. ValuEngine upgraded Medley Capital from a “hold” rating to a “buy” rating in a research report on Friday, September 1st. Keefe, Bruyette & Woods restated a “hold” rating and issued a $7.00 price objective on shares of Medley Capital in a research report on Wednesday, August 16th. Finally, Jefferies Group restated a “hold” rating and issued a $6.50 price objective on shares of Medley Capital in a research report on Wednesday, August 16th. One analyst has rated the stock with a sell rating, six have given a hold rating and one has given a buy rating to the company. The stock currently has an average rating of “Hold” and a consensus target price of $7.00.
Medley Capital (NYSE:MCC) last posted its earnings results on Thursday, December 7th. The investment management company reported $0.16 EPS for the quarter, hitting the Zacks’ consensus estimate of $0.16. The company had revenue of $22.10 million for the quarter, compared to the consensus estimate of $23.51 million. Medley Capital had a positive return on equity of 8.04% and a negative net margin of 6.07%. Medley Capital’s quarterly revenue was down 18.7% compared to the same quarter last year. During the same period in the previous year, the business earned $0.23 earnings per share. equities analysts anticipate that Medley Capital will post 0.67 EPS for the current fiscal year.
Several large investors have recently modified their holdings of the company. Sigma Planning Corp acquired a new position in Medley Capital in the first quarter valued at $103,000. Acrospire Investment Management LLC increased its stake in Medley Capital by 52.6% in the third quarter. Acrospire Investment Management LLC now owns 13,930 shares of the investment management company’s stock valued at $106,000 after purchasing an additional 4,800 shares during the last quarter. Malaga Cove Capital LLC acquired a new position in Medley Capital in the third quarter valued at $107,000. IFP Advisors Inc increased its stake in Medley Capital by 8.3% in the second quarter. IFP Advisors Inc now owns 16,559 shares of the investment management company’s stock valued at $111,000 after purchasing an additional 1,269 shares during the last quarter. Finally, Airain ltd increased its stake in Medley Capital by 2.7% in the second quarter. Airain ltd now owns 17,362 shares of the investment management company’s stock valued at $111,000 after purchasing an additional 462 shares during the last quarter. Institutional investors and hedge funds own 29.34% of the company’s stock.
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Medley Capital Company Profile
Medley Capital Corporation is a non-diversified closed-end management investment company. The Company’s investment objective is to generate current income and capital appreciation by lending directly to privately-held middle market companies, primarily through directly originated transactions to help these companies expand their business, refinance and make acquisitions.
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