Analysts’ Recent Ratings Updates for OFS Capital (OFS)
A number of research firms have changed their ratings and price targets for OFS Capital (NASDAQ: OFS):
- 5/17/2019 – OFS Capital was downgraded by analysts at Zacks Investment Research from a “buy” rating to a “sell” rating. According to Zacks, “OFS Capital Corporation is a closed-end, non-diversified management investment company. It is engaged in providing capital to North American middle market companies. Its investment objective is to provide its stockholders with both current income and capital appreciation primarily through debt investments and equity investments in asset classes including senior secured, unitranche, second-lien and mezzanine loans. “
- 5/10/2019 – OFS Capital was upgraded by analysts at Zacks Investment Research from a “hold” rating to a “buy” rating. They now have a $14.00 price target on the stock. According to Zacks, “OFS Capital Corporation is a closed-end, non-diversified management investment company. It is engaged in providing capital to North American middle market companies. Its investment objective is to provide its stockholders with both current income and capital appreciation primarily through debt investments and equity investments in asset classes including senior secured, unitranche, second-lien and mezzanine loans. “
- 5/6/2019 – OFS Capital was downgraded by analysts at LADENBURG THALM/SH SH from a “buy” rating to a “neutral” rating.
- 5/6/2019 – OFS Capital had its “buy” rating reaffirmed by analysts at National Securities. They now have a $15.00 price target on the stock. They wrote, “▪ For 1Q19 OFS earned NII/share of $0.36, two cents above our estimate and the quarterly dividend of $0.34/share. The company had $63.6mm of originations versus repayments of $6.0mm and sales of $16.3mm, driving the portfolio at cost to increase to $439.0mm from $413.3mm Q/Q.
▪ OFS increased its Pacwest facility size to $100mm from $50mm, reduced the borrowing cost by 50 bps, and amended the facility to allow for the reduced asset coverage of 150% afforded to the company. OFS is still seeking to enter into another credit facility which would enable it to make loans to larger borrowers that we think will come with lower pricing and more favorable advance rates relative to the Pacwest facility. We think this bodes well for both portfolio growth and the Sharpe ratio.
▪ NAV/share decreased on the quarter to $13.04 from $13.10 in 4Q18. As a reminder, in 4Q18 NAV declined from $13.75 due to mark-to-market from wider credit spreads. We expected a significant recovery in NAV from a rebounding loan market, however, idiosyncratic negative marks outweighed tighter spreads and NAV decreased. Although there were no further non-accruals for OFS, special mention loans increased to 13.7% of the book from 8.1% Q/Q. While we would really start to be concerned if there were any loans placed in the substandard or doubtful buckets, we will certainly keep an eye on this metric going forward. If this becomes a trend it’s something that could potentially make us reconsider our NAV/share and NII/share estimates as we may factor in future non-accruals into our model.
▪ We are maintaining our 2019 NII/share estimate of $1.55 and revising our 2020 NII/share estimate to $1.66 from $1.68. We are maintaining our BUY rating and $15 price target.”
OFS opened at $12.34 on Wednesday. The company has a debt-to-equity ratio of 1.06, a current ratio of 0.19 and a quick ratio of 0.19. The stock has a market capitalization of $163.61 million, a price-to-earnings ratio of 8.94 and a beta of 0.70. OFS Capital Corp has a 12 month low of $9.53 and a 12 month high of $12.80.
OFS Capital (NASDAQ:OFS) last released its quarterly earnings data on Friday, May 3rd. The investment management company reported $0.36 earnings per share for the quarter, beating the consensus estimate of $0.34 by $0.02. The business had revenue of $12.35 million for the quarter, compared to analyst estimates of $11.69 million. OFS Capital had a return on equity of 10.84% and a net margin of 21.25%. As a group, sell-side analysts forecast that OFS Capital Corp will post 1.42 EPS for the current fiscal year.
Hedge funds and other institutional investors have recently added to or reduced their stakes in the company. Macquarie Group Ltd. lifted its stake in shares of OFS Capital by 279.1% in the 4th quarter. Macquarie Group Ltd. now owns 4,723 shares of the investment management company’s stock valued at $50,000 after purchasing an additional 3,477 shares in the last quarter. GSA Capital Partners LLP acquired a new position in shares of OFS Capital in the 4th quarter valued at about $114,000. Acadian Asset Management LLC acquired a new position in shares of OFS Capital in the 1st quarter valued at about $161,000. Wells Fargo & Company MN lifted its stake in shares of OFS Capital by 36.2% in the 1st quarter. Wells Fargo & Company MN now owns 19,190 shares of the investment management company’s stock valued at $225,000 after purchasing an additional 5,097 shares in the last quarter. Finally, Sigma Planning Corp lifted its stake in shares of OFS Capital by 5.7% in the 1st quarter. Sigma Planning Corp now owns 21,644 shares of the investment management company’s stock valued at $254,000 after purchasing an additional 1,172 shares in the last quarter. 22.08% of the stock is currently owned by institutional investors and hedge funds.
OFS Capital Corporation is a business development company specializing in direct and fund investments as well as add-on acquisitions. It does not invest in operational turnarounds or start-up businesses. For direct, it specializes in debt and structured equity investments, recapitalizations and refinancing, management and leveraged buyouts, acquisition financings, shareholder liquidity events, growth capital, independent sponsor transactions, ESOPs, and minority investments in the lower middle market companies.
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