UPDATE: Stifel Nicolaus Upgrades Hercules Technology Growth Capital to Buy on Leverage Potential
Stifel Nicolaus raised its rating on Hercules Technology Growth Capital (NYSE: HTGC) from Hold to Buy and announced a $13 price target.
Stifel Nicolaus commented, "We have been big fans of the HTGC venture debt lending model; however, over the past few years we have been frustrated with the low amount of leverage HTGC used on its balance sheet which hampered earnings potential. We believe that changed on December 19th when HTGC closed a new debt securitization and issued $129 million of notes at a fixed rate of 3.32%. This instantly raises the regulatory leverage on HTGC's balance sheet from 0.49x debt:equity last quarter to 0.75x. With $107 million of cash on its balance sheet as of 9/30/12, plus the $129 million of new debt and the $32 million equity raise in 4Q12, we estimate HTGC has nearly $270 million of cash on its balance sheet for new investments."
Hercules Technology Growth Capital closed at $11.35 on Friday.
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