UPDATE: Wunderlich Securities Downgrades WhiteHorse Finance as Stock is Challenged to Reinvest Proceeds of Large Paydown

In a report published Wednesday, Wunderlich Securities analyst Merrill Ross downgraded the rating on

from Buy to Hold, but reiterated the $15.50 price target. In the report, Wunderlich Securities noted, “Whitehorse Finance, Inc (WHF) reported its third full quarter since its IPO in December 2012. Reported NII of $0.42/sh exceeded our $0.32 estimate. The outperformance was driven by prepayment fees; WHF's largest portfolio company prepaid its $60mm loan. Because we think it will take several quarters for WHF to rebuild its investment portfolio, we are lowering our NII estimates sharply, though we continue to expect operating cash flows to cover the indicated dividend. Our price target assumes that the shares find price support at forward estimated NAV, or $15.50/sh, but we are lowering our rating to Hold while the company proves that it has the discipline and market savvy to ramp up its investments.” WhiteHorse Finance closed on Tuesday at $14.91.