UPDATE: UBS Starts Fifth Street Asset Management (FSAM) at Sell

UBS initiated coverage on Fifth Street Asset Management (NASDAQ: FSAM) with a Sell rating and a price target of $8.00. Analyst Matthew Howlett noted 96% of Fifth Street's revenue is driven by two BDC entities, and he thinks the company could face earnings pressure given the current environment.

"We expect FSAM to experience more “pain” before “gain” and argue that investors will be able to purchase shares at a lower price over the next 12 months," said Howlett.

"Underperformance of its two publicly traded BDCs, FSC and FSFR, will impede near-term AUM growth in our view. Moreover, we believe both entities will potentially lower/waive fees to improve ROEs and regain investor trust. In addition, the capital bases could shrink via share buybacks before expanding. While these actions are probably good long term, FSAM's earnings and multiple could contract near term," added the analyst.

For an analyst ratings summary and ratings history on Fifth Street Asset Management click here. For more ratings news on Fifth Street Asset Management click here.

Shares of Fifth Street Asset Management closed at $10.22 yesterday.

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