Wells Fargo Upgrades Horizon Technology Finance (HRZN) to Outperform
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Price: $14.45 +1.19%
Rating Summary:
7 Buy, 3 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 13
Rating Summary:
7 Buy, 3 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 13
Trade HRZN Now!
Wells Fargo upgraded Horizon Technology Finance (NASDAQ: HRZN) from Market Perform to Outperform and raised its valuation range from $15.00-16.00 to 15.50-16.50.
The firm cited: (1) HRZN's ranking in our recently published BDC Scorecard Report and (2) technical weakness related to the recent dividend reduction.
The analyst comments, "Recall that in an effort to better align HRZN’s dividend with net operating income, HRZN announced a Q1 2013 dividend reduction to $0.345, down from $0.44/share previously. Dividends will now be paid on a monthly basis (roughly $0.115/share). Note that this dividend reduction was in line with our expectation. Overall, we believe the dividend reduction was a prudent decision as we have been highly critical of those BDC management teams who "keep the dream alive" by adhering to less conservative dividend policies while effectively paying out a return of capital. Following the dividend reduction, it is our view that HRZN will now trade more in line with Quartile 2 peers. Based on the current price, HRZN shares trade at a 9.5% dividend yield (and at 0.89x NAV), well above Quartile 2 peers and our implied yield range of a 50 bps premium to 8.2% to 8.7%. To the extent that the shares trade in line with our 8.7-9.2% Quartile 2 yield range, we see roughly 10-15% price upside potential in addition to a 9.5% yield."
For an analyst ratings summary and ratings history on Horizon Technology Finance click here. For more ratings news on Horizon Technology Finance click here.
Shares of Horizon Technology Finance closed at $14.73 yesterday, with a 52 week range of $13.46-$18.17.
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The firm cited: (1) HRZN's ranking in our recently published BDC Scorecard Report and (2) technical weakness related to the recent dividend reduction.
The analyst comments, "Recall that in an effort to better align HRZN’s dividend with net operating income, HRZN announced a Q1 2013 dividend reduction to $0.345, down from $0.44/share previously. Dividends will now be paid on a monthly basis (roughly $0.115/share). Note that this dividend reduction was in line with our expectation. Overall, we believe the dividend reduction was a prudent decision as we have been highly critical of those BDC management teams who "keep the dream alive" by adhering to less conservative dividend policies while effectively paying out a return of capital. Following the dividend reduction, it is our view that HRZN will now trade more in line with Quartile 2 peers. Based on the current price, HRZN shares trade at a 9.5% dividend yield (and at 0.89x NAV), well above Quartile 2 peers and our implied yield range of a 50 bps premium to 8.2% to 8.7%. To the extent that the shares trade in line with our 8.7-9.2% Quartile 2 yield range, we see roughly 10-15% price upside potential in addition to a 9.5% yield."
For an analyst ratings summary and ratings history on Horizon Technology Finance click here. For more ratings news on Horizon Technology Finance click here.
Shares of Horizon Technology Finance closed at $14.73 yesterday, with a 52 week range of $13.46-$18.17.
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