UPDATE: J.P. Morgan Initiates Fifth Street Finance with Overweight on Optimization Opportunity
In a report published Wednesday, J.P. Morgan analyst Richard Shane initiated coverage on Fifth Street Finance Corp. (NASDAQ: FSC) with an Overweight rating and $11.00 price target.
In the report, Shane noted, “FSC is one of five BDCs to have crossed the $1.5B asset threshold. We believe that as BDCs migrate from $1B to $2B in receivables, they begin to generate additional competitive advantages including: more consistent access to equity, lower borrowing costs, increased operating leverage, and greater transaction flexibility. In our view, FSC is at this inflection point, potentially creating a significant opportunity over the next 12 to 24 months. Through year-end, we expect the company to optimize leverage and that NII will fully cover the quarterly dividend. We view FSC's increasingly secure 10.6% dividend yield as attractive.”
Fifth Street Finance Corp. closed on Tuesday at $10.87.
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