Gladstone Capital (NASDAQ:GLAD)‘s stock had its “sell” rating reaffirmed by analysts at National Securities in a report released on Monday. They presently have a $7.00 target price on the investment management company’s stock. National Securities’ target price suggests a potential downside of 21.35% from the company’s current price.

The analysts wrote, “ Gladstone’s NAV/share decreased by 4.1% on the quarter to $7.98 from $8.32 after falling by 6.1% Q/Q the quarter prior. Francis was marked at 27% of cost last quarter and during the 12/31/18 quarter GLAD recognized a $26.9mm realized loss on Francis. With the chapter 11 restructuring, Gladstone’s $27.0mm of debt in Francis was rolled into $1.35mm of equity and the company also purchased an additional $5.0mm of equity in the new entity, “FES Resources.”

 The portfolio at fair value increased to $431.2mm from $390.1mm Q/Q as Gladstone had very robust originations of $59.2mm and only $8.9mm of repayments. During the quarter the company issued $57.5mm of 2023 notes and has the ability to go above 1.00x D/E. We expect the company to exceed 1.00x in F3Q20 although thus far the company has not decided to reduce fees on incrementally higher leverage and thus the benefit to shareholders from this increase is likely to be muted as fees increase with the augmented balance sheet.

 The market has, in our opinion, surprisingly shrugged off substantial NAV declines and continued to award GLAD shares a 12% premium to 12/31/18 NAV (as of 2/8/19). Despite the dividend being earned on a NII basis we do not expect NII/share to have growth levers.

 Additionally, while GLAD wrapped up 12/31/18 with no non-accruals after the restructuring of Francis, we think there is heightened risk that the largely non-sponsor LMM portfolio experiences further stress going forward. Accordingly, we continue to think shares warrant a discount to forward NAV estimates. We note that our target price of $7 represents an 11% discount to our F4Q20 NAV/share estimate of $7.83, which is only a decrease of 1.9% from F1Q19 levels.

 We are maintaining our fiscal 2019 NII/share estimate of $0.84 and revising our fiscal 2020 NII/share estimate to $0.86 from $0.84. “

GLAD has been the topic of a number of other reports. TheStreet lowered shares of Gladstone Capital from a “b-” rating to a “c” rating in a report on Monday, December 10th. ValuEngine upgraded shares of Gladstone Capital from a “sell” rating to a “hold” rating in a research note on Thursday, December 27th. BidaskClub upgraded shares of Gladstone Capital from a “hold” rating to a “buy” rating in a research note on Friday. Finally, Zacks Investment Research upgraded shares of Gladstone Capital from a “sell” rating to a “hold” rating in a research note on Thursday, December 6th. One investment analyst has rated the stock with a sell rating, two have assigned a hold rating and one has issued a buy rating to the company. Gladstone Capital currently has an average rating of “Hold” and an average price target of $9.00.

Gladstone Capital stock opened at $8.90 on Monday. The company has a market cap of $253.69 million, a price-to-earnings ratio of 10.47 and a beta of 1.25. Gladstone Capital has a 52-week low of $6.41 and a 52-week high of $9.87. The company has a current ratio of 0.09, a quick ratio of 0.09 and a debt-to-equity ratio of 0.45.

Gladstone Capital (NASDAQ:GLAD) last announced its quarterly earnings data on Wednesday, February 6th. The investment management company reported $0.21 earnings per share for the quarter, meeting the Zacks’ consensus estimate of $0.21. Gladstone Capital had a net margin of 16.68% and a return on equity of 9.99%. The business had revenue of $11.91 million for the quarter, compared to analyst estimates of $12.13 million. Equities analysts expect that Gladstone Capital will post 0.85 earnings per share for the current fiscal year.

In other Gladstone Capital news, President Robert L. Marcotte acquired 10,000 shares of the stock in a transaction on Tuesday, November 20th. The shares were bought at an average cost of $8.71 per share, with a total value of $87,100.00. The transaction was disclosed in a document filed with the SEC, which is accessible through this hyperlink. Also, President Robert L. Marcotte acquired 12,000 shares of the stock in a transaction on Friday, December 7th. The shares were acquired at an average cost of $8.33 per share, for a total transaction of $99,960.00. Following the completion of the transaction, the president now directly owns 460,037 shares in the company, valued at approximately $3,832,108.21. The disclosure for this purchase can be found here. Insiders have purchased a total of 22,582 shares of company stock worth $192,077 over the last quarter. 5.85% of the stock is owned by company insiders.

A number of institutional investors have recently modified their holdings of the business. PFG Advisors purchased a new stake in shares of Gladstone Capital in the fourth quarter valued at about $84,000. TCI Wealth Advisors Inc. boosted its holdings in shares of Gladstone Capital by 53.4% in the fourth quarter. TCI Wealth Advisors Inc. now owns 25,082 shares of the investment management company’s stock valued at $183,000 after acquiring an additional 8,733 shares in the last quarter. Koshinski Asset Management Inc. purchased a new stake in shares of Gladstone Capital in the third quarter valued at about $256,000. Novare Capital Management LLC boosted its holdings in shares of Gladstone Capital by 37.0% in the third quarter. Novare Capital Management LLC now owns 32,750 shares of the investment management company’s stock valued at $311,000 after acquiring an additional 8,850 shares in the last quarter. Finally, California Public Employees Retirement System boosted its holdings in shares of Gladstone Capital by 18.5% in the second quarter. California Public Employees Retirement System now owns 44,200 shares of the investment management company’s stock valued at $398,000 after acquiring an additional 6,900 shares in the last quarter. 11.73% of the stock is currently owned by institutional investors.

About Gladstone Capital

Gladstone Capital Corporation is a private equity and a venture capital fund specializing in lower middle market, growth capital, add on acquisitions, debt investments in senior loans, second lien loans, senior subordinated loans, junior subordinated loans, and mezzanine loans and equity investments in the form of common stock, preferred stock, limited liability company interests, or warrants.

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