Deutsche Bank Initiates Solar Capital (SLRC) Coverage, Shares Fall 3%

Deutsche Bank Securities analysts Stephen Laws and Chris Merwin initiated coverage of Solar Capital Ltd

with a Buy rating and a price target of $24.50 per share. They said that because Solar Capital (

) operates in the niche upper-middle market, the company doesn't face a great deal of competition, has good exit opportunities and is able to make large individual investments. One of the risks facing Solar Capital (

) is that the company's legacy asset portfolio could hurt performance in the event of an economic downturn. The Deutsche Bank Securities analysts wrote, "We expect Solar Capital to take advantage of imbalanced supply and demand in the leveraged loan market by originating mezzanine loans through portfolio companies or their affiliated financial sponsors to generate attractive risk-adjusted returns. The company has a veteran management team, with a large ownership stake in the company; a seasoned, highyielding investment portfolio with zero non-accrual loans;l and room for additional growth to take advantage of the demand for private capital in the middle-market space on favorable terms." Shares of Solar Capital (

) were down more than 3% at $20.91 per share during the morning trading session.