FBR Capital Downgrades PennantPark Investment (PNNT) to Market Perform Following Q4 EPS Miss and Dividend Cut
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FBR Capital downgraded PennantPark Investment (NASDAQ: PNNT) from Outperform to Market Perform and maintains a price target of $8.00 following EPS miss, dividend cut and fee waiver.
Analyst Christopher Nolan commented, "PNNT reported F4Q16 (quarter ended September 30) EPS of $0.21, below our estimate of $0.27 and the consensus mean of $0.26. PNNT also announced that it will reduce its quarterly dividend to $0.18/share from $0.28/share beginning in F2Q17 and will extend its waiver of 16% of management fees through December 2017 to allow additional time for energy investments to recover. Management indicated that it is focusing on lower-risk, secured investments, which we expect will lower investment yields. Although asset quality remained largely steady, energy exposure remained elevated at 11% of investments at fair value. Given this, we do not believe that PNNT will be able to materially narrow its price/NAV valuation discount to peers in the coming quarters and are lowering our EPS estimates and downgrading PNNT shares to Market Perform. We reiterate our $8 price target."
Shares of PennantPark Investment closed at $7.25 yesterday.
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