UPDATE: Wells Fargo Securities Downgrades Hercules Technology Growth Capital to Market Perform on Full Valuation

In a report published Tuesday, Wells Fargo Securities analyst Jonathan Bock downgraded the rating on

from Outperform to Market Perform. In the report, Wells Fargo Securities noted, “We downgrade HTGC to Market Perform from Outperform and revise our valuation range to $14-15 from $14.50-15.50. YTD shares are up 40% compared to 8.7% for WFBDC and 16.4% for the S&P 500. While HTGC continues to be indicative of a Quartile 1 BDC, we believe the valuation is beginning to appear full with the current yield at 7.7%. While the long-term prospects for HTGC remain strong with accretive offerings and a scalable platform, we believe meaningful near-term upside may be limited by valuation. While credit issues should remain limited and equity realizations should help boost NAV slightly in the back half of 2013, we believe that HTGC is at a point where earnings growth must not justify its current 1.45x NAV valuation. We do see slight upward biases to 3Q13 NAV from Facebook ($0.06/share) and a potential accretive offering. However, even at a higher NAV, we believe there is little room for further yield compression and investors will likely wait for further NOI growth in 2013. Overall, we believe HTGC remains a best in class BDC and one of the highest quality names in our coverage universe based on 1) an internally managed operating platform, 2) focus on the attractive venture lending niche, and 3) strong credit/total return performance throughout the credit cycle.” Hercules Technology Growth Capital closed on Monday at $14.63.