Wells Fargo Downgrades Medley Capital (MCC) to Market Perform
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Price: $28.31 --0%
Rating Summary:
2 Buy, 12 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 11 | New: 14
Rating Summary:
2 Buy, 12 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 11 | New: 14
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Wells Fargo downgraded Medley Capital (NYSE: MCC) from Outperform to Market Perform with a price target of $14.50 (from $14.75). Analyst Jonathan Bock pointed to valuation and potential for near-term volatility.
"We are downgrading shares of MCC to Market Perform from Outperform based on (1) the stock’s current valuation—1.07x price to NAV vs 1.02x for Quartile 3 peers, (2) the potential for near-term volatility in the BDC space as a result of the pending Russell rebalance, (3) near-term credit issues associated with two underperforming investments (Calloway Labs and United Road Towing) and (4) the potential for new origination returns to fall below MCC’s cost of capital (recently raised at 13.3% required rate of return)," said Bock.
"Since 9/4/13, Medley stock has earned investors a total return of 9.2% vs. 5.2% for the Wells Fargo BDC Index and 12.9% for the S&P 500. Moreover, as outlined in the BDC Scorecard, we believe investors should roll back exposures to lower quartile BDCs in favor of Quartile 1 names—simply due to the fact that Quartile 1 BDCs stand to generate less volatility in light of the pending Russell rebalance. Overall, we believe Medley remains a strong middle market investment franchise with an above average yield/growth profile; however, we believe that is currently reflected in the stock price at the moment," he added.
For an analyst ratings summary and ratings history on Medley Capital click here. For more ratings news on Medley Capital click here.
Shares of Medley Capital closed at $13.62 yesterday.
"We are downgrading shares of MCC to Market Perform from Outperform based on (1) the stock’s current valuation—1.07x price to NAV vs 1.02x for Quartile 3 peers, (2) the potential for near-term volatility in the BDC space as a result of the pending Russell rebalance, (3) near-term credit issues associated with two underperforming investments (Calloway Labs and United Road Towing) and (4) the potential for new origination returns to fall below MCC’s cost of capital (recently raised at 13.3% required rate of return)," said Bock.
"Since 9/4/13, Medley stock has earned investors a total return of 9.2% vs. 5.2% for the Wells Fargo BDC Index and 12.9% for the S&P 500. Moreover, as outlined in the BDC Scorecard, we believe investors should roll back exposures to lower quartile BDCs in favor of Quartile 1 names—simply due to the fact that Quartile 1 BDCs stand to generate less volatility in light of the pending Russell rebalance. Overall, we believe Medley remains a strong middle market investment franchise with an above average yield/growth profile; however, we believe that is currently reflected in the stock price at the moment," he added.
For an analyst ratings summary and ratings history on Medley Capital click here. For more ratings news on Medley Capital click here.
Shares of Medley Capital closed at $13.62 yesterday.
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