In a report published Wednesday, Keefe, Bruyette & Woods analyst Troy Ward downgraded the rating on Horizon Technology Finance Corporation HRZN from Market Perform to Underperform, but reiterated the $13.00 price target.
In the report, Keefe, Bruyette & Woods noted, “Earnings missed by a penny but the problem was the credit quality. We are downgrading to Underperform and encourage investors to sell shares and redeploy the capital into better performing BDCs. HRZN has $23.2 million on non-accrual (10.4% of the portfolio) including $16.1 million new this quarter. Earnings covered the dividend this quarter; however, at 0.9:1 debt to equity we believe the $1.38 annual dividend level will be hard to maintain. Our 2014 estimates decline to $1.30 down from $1.37 and our 2015 estimate is $1.30 down from $1.39 due to the new non-accruals. Conference call is at 9:00am EDT.”
Horizon Technology Finance Corporation closed on Tuesday at $14.10.
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