Oppenheimer Reiterates Outperform Rating, $16 PT on Stellus Capital Investment Corporation on 4Q12 Results

In a report published Wednesday, Oppenheimer analyst Chris Kotowski reiterated his Outperform rating and $16.00 price target on Stellus Capital Investment Corporation SCM. In the report, Kotowski noted, “Stellus reported its first quarter as a public company, and we believe that the business model is panning out roughly as we expected. That said, 4Q12 results were somewhat distorted by typical IPO phenomena. For starters, the results were reported only for the 54-day period following the IPO on November 7, when the portfolio was acquired. In addition, there were about $1.1M of IPO organizational costs. We are trimming estimates slightly to reflect two assumptions: (1) That all origination fees will be deferred over the life of the loan whereas we had previously included some ‘up-front' fees; and (2) Management's guidance of a 12.5% portfolio yield, 0.50% less than we had modeled.” Stellus Capital Investment Corporation closed on Tuesday at $15.16.