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Monroe Capital Downgraded To Neutral At Ladenburg Thalmann, Says Stock Appears Fully Valued

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Ladenburg Thalmann downgraded Monroe Capital Corp (NASDAQ: MRCC) to Neutral from Buy and removed the prior $15 price target on shares, awaiting more attractive entry point.

According to the analysts, despite the company having another strong quarter, reporting 2Q16 NII/share of $0.44 compared to their $0.41 forecast on higher-than-forecast fee income and lower G&A, they believe shares are fairly priced.

The analysts reduced their adjusted 2016 NII/share forecast from $1.75 to $1.73 due to earnings drag.

"As dividend income is currently generating ~8¢/sh of gross income and taking into account the interest rate uncertainty, we expect MRCC to maintain its regular dividend but believe there may be scope for special dividends," the analysts wrote.

Despite maintaining their view that Monroe is an exceedingly well-managed BDC, the analysts believe shares are fairly valued having reached a P/NAV multiple of around 1.1x, their historical high ratio.

 

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