UPDATE: Wells Fargo Initiates Coverage on TCP Capital on Multiple Positive Factors
In a report published Tuesday, Wells Fargo Securities analyst Jonathan Bock initiated coverage on TCP Capital Corp. (NASDAQ: TCPC) with an Outperform rating.
In the report, Wells Fargo Securities noted, “We are initiating coverage of TCP Capital Corp. (TCPC) with an Outperform rating based on (1) the stock's attractive valuation at 1.03x NAV, (2) the potential for NOI growth via leverage/portfolio churn, (3) the lower risk nature of the portfolio (i.e. heavily weighted towards senior secured investments), and (4) the company's alignment with shareholders through a management fee which includes realized and unrealized gains and losses. In addition, we believe allocating to Quartile 1 BDCs like TCPC is sensible based on (1) strong dividend coverage, (2) a strong liquidity position and (3) an attractive cost structure. Our 2013/2014 NOI/share estimates are $1.62 and $1.61, respectively. Our valuation range for TCPC is $18.50-19.50 per share, based on an expected earnings yield of 8.2-8.8% on our 2014 estimate of $1.61. This implies total return potential of 18-26% over the next 12-18 months. We also estimate TCPC will generate 2013/2014 dividends of $1.48 and $1.49, respectively.”
TCP Capital Corp. closed on Monday at $15.56.
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