UPDATE: Compass Point Initiates Coverage on American Capital Ltd. with Buy Rating, $17.50 PT on Good Recovery Potential

In a report published Thursday, Compass Point analyst Mike Turner initiated coverage on American Capital Ltd.

with a Buy rating and $17.50 price target. In the report, Turner noted, “We initiate with a Buy rating and $17.50 price target. ACAS is one of the early pioneers of the BDC model having IPO'd in Aug. '97. To investors, the company is most known for its aggressive growth heading into the teeth of the prior downturn and subsequent restructuring in 2010. As a result, the company's portfolio remains saddled with a significant amount of legacy investments and sentiment in the stock is plagued by this past performance. While valid, we believe these concerns are reflected in the 20% discount to NAV. Further, there are several actions that we believe could boost NAV and reduce (though not close) the current discount. Overall, we believe ACAS provides investors a higher beta exposure to an economic recovery at a discount, with the potential for additional appreciation from a restructuring. We initiate with FY13/14 NOI estimates of $1.05/$1.14, respectively.” American Capital Ltd. closed on Wednesday at $14.35.