Keefe, Bruyette & Woods Initiates Coverage On Medley Management Inc

Keefe, Bruyette & Woods initiated coverage of Medley Management Inc. MDLY Tuesday with an Outperform rating and target price of $19.50.

Medley is a Credit-Oriented manager with $3.3 billion in Assets Under Management as of June 30, 2014.

Analyst Robert Lee noted that Medley “has a very sticky asset base with good visibility into management fee and earnings growth and we think it offers a favorable risk/return profile.” 

Lee thought, however, that the company’s “valuation is somewhat tethered to the valuations of publicly traded BDCs, which have been under pressure.”

The report viewed Medley’s “credit focus and significant amount of locked-up capital” as providing “attractive defensive characteristics and good visibility into near-term revenues and earnings.”

Lee predicted “there to be good secular demand for alternative credit strategies and the company’s focus on middle-market direct lending should be a point of differentiation.”

The report applied a 15x multiple to the firm’s estimate of Medley’s management fee driven earnings.

Medley Management Inc. recently traded at $16.35, up 2.96 percent.