UPDATE: Stifel Nicolaus Downgrades MCG Capital Corporation to Sell on Valuation
Stifel Nicolaus lowered its rating on MCG Capital Corporation (NASDAQ: MCGC) from Hold to Sell on fundamentals and credit quality.
Stifel Nicolaus said, "MCGC's valuation has it trading at a slight premium to the group while their historical fundamental says they should be trading at a discount to the group. MCGC is trading with a 9.5% forward earnings yield versus 9.7% for the BDC industry average. Given MCGC's difficult credit track record, we believe MCGC should trade at a meaningful discount to its peers. In addition, after MCGC pays its 3Q12 dividend, we anticipate (and management indicated) the 4Q12 dividend will be cut and we estimate it will be cut to $0.48/share annually from $0.56/share."
MCG Capital Corporation closed at $5.27 on Monday.
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