Golub Capital BDC (GBDC) Upgraded to Buy by National Securities

Golub Capital BDC (NASDAQ:GBDC) was upgraded by equities research analysts at National Securities from a “neutral” rating to a “buy” rating in a research report issued to clients and investors on Monday, Marketbeat reports. The firm presently has a $21.00 price objective on the investment management company’s stock, up from their previous price objective of $19.00. National Securities’ price objective suggests a potential upside of 15.01% from the company’s previous close.

The analysts wrote, “• Golub posted core NII/share of $0.32/share for fiscal 1Q18, in-line with our estimate and the quarterly dividend. GBDC has covered its quarterly dividend every quarter on a core NI basis since fiscal 3Q15. As the company continues to deploy capital in an accretive manner at a measured pace, we expect dividend coverage to mildly improve going forward.

• Golub has one of the lowest base management fees of any publicly trade externally managed BDC, at 1.375% of gross assets less cash, and we think it’s possible for this to come down further as the private AUM of the business grows more.

• Golub’s platform remains one of the largest of any BDC at over $18 billion. The ability to co-invest, provide certainty of close, and be a partner with its borrowers only serves to improve quality, sponsor finance deal flow for the company. Additionally, it greatly mitigates concentration risk. On a $1.63 billion portfolio (excluding the SLF), the average investment size is a mere $8.6 million.

• This sound asset quality has led to minimal non-accruals, with non-accruals as a percentage of par averaging a mere 0.6% of the portfolio at par since fiscal 1Q13.

• GBDC has been extremely conservative with raising equity and has been mindful to raise “just-in-time capital”. GBDC has raised public equity in 7 quarters since fiscal 2Q14 with an average net raise of $37.8 million.

• Accordingly, we upgrading this best-in-class BDC to BUY from NEUTRAL and increasing our price target to $21 from $19. We are adjusting our fiscal 2018 core NII/share estimate to $1.28 from $1.27 and our fiscal 2019 core NII/share estimate to $1.30 from $1.29.”

GBDC has been the subject of a number of other research reports. BidaskClub lowered Golub Capital BDC from a “hold” rating to a “sell” rating in a research report on Thursday, January 4th. Zacks Investment Research upgraded Golub Capital BDC from a “strong sell” rating to a “hold” rating in a research report on Wednesday, January 24th. Finally, ValuEngine upgraded Golub Capital BDC from a “hold” rating to a “buy” rating in a research report on Saturday, December 9th. Five analysts have rated the stock with a hold rating and two have issued a buy rating to the company. Golub Capital BDC has a consensus rating of “Hold” and a consensus target price of $20.38.

Shares of Golub Capital BDC (NASDAQ:GBDC) traded up $0.35 during mid-day trading on Monday, reaching $18.26. The company’s stock had a trading volume of 352,013 shares, compared to its average volume of 295,567. Golub Capital BDC has a 1-year low of $17.35 and a 1-year high of $20.50. The company has a debt-to-equity ratio of 0.86, a current ratio of 3.46 and a quick ratio of 3.46. The stock has a market cap of $1,090.00, a price-to-earnings ratio of 12.51, a PEG ratio of 1.41 and a beta of 0.65.

Golub Capital BDC (NASDAQ:GBDC) last issued its quarterly earnings results on Wednesday, February 7th. The investment management company reported $0.32 earnings per share (EPS) for the quarter, hitting the Zacks’ consensus estimate of $0.32. Golub Capital BDC had a return on equity of 7.94% and a net margin of 58.64%. The business had revenue of $36.45 million during the quarter, compared to analyst estimates of $35.22 million. During the same quarter in the prior year, the business posted $0.34 EPS. Golub Capital BDC’s revenue for the quarter was up 7.7% compared to the same quarter last year. equities analysts anticipate that Golub Capital BDC will post 1.27 earnings per share for the current fiscal year.

Several institutional investors have recently modified their holdings of GBDC. Arrowstreet Capital Limited Partnership grew its position in shares of Golub Capital BDC by 120.3% during the fourth quarter. Arrowstreet Capital Limited Partnership now owns 634,791 shares of the investment management company’s stock valued at $11,553,000 after purchasing an additional 346,596 shares in the last quarter. Wells Fargo & Company MN grew its position in shares of Golub Capital BDC by 15.7% during the third quarter. Wells Fargo & Company MN now owns 1,460,439 shares of the investment management company’s stock valued at $27,486,000 after purchasing an additional 198,503 shares in the last quarter. Atlantic Trust Group LLC grew its position in Golub Capital BDC by 388.8% in the third quarter. Atlantic Trust Group LLC now owns 138,334 shares of the investment management company’s stock worth $2,603,000 after acquiring an additional 110,034 shares in the last quarter. Novare Capital Management LLC grew its position in Golub Capital BDC by 350.6% in the fourth quarter. Novare Capital Management LLC now owns 134,950 shares of the investment management company’s stock worth $2,456,000 after acquiring an additional 105,000 shares in the last quarter. Finally, Sumitomo Mitsui Asset Management Company LTD grew its position in Golub Capital BDC by 34.7% in the third quarter. Sumitomo Mitsui Asset Management Company LTD now owns 305,734 shares of the investment management company’s stock worth $5,753,000 after acquiring an additional 78,720 shares in the last quarter. Hedge funds and other institutional investors own 40.56% of the company’s stock.

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About Golub Capital BDC

Golub Capital BDC, Inc is an externally managed, non-diversified, closed-end, management investment company. The Company’s investment objective is to generate current income and capital appreciation by investing primarily in senior secured and one stop loans of the United States middle-market companies.

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