UPDATE: Ladenburg Thalmann Upgrades OFS Capital (OFS) to Buy

Ladenburg Thalmann analyst Mickey Schleien upgraded OFS Capital (NASDAQ: OFS) from Neutral to Buy with a price target of $11.50.

The analyst comments "OFS's liquidity is ample at 38% of AUM and 17x unfunded commitments. Relatively stable debt balances combined with portfolio appreciation caused total D/E to decline from 1.99x to a still relatively high 1.80x. Regulatory D/E is more comfortable at 1.27x, and the regulatory asset coverage ratio increased from 171% to 179% which provides some cushion against potential capital market volatility (particularly given the 14% allocation to CLOs). We assume the portfolio churns in a very competitive market but continue to forecast dividend coverage from NII. There is potential upside to our forecast should OFS monetize its equity investments. In addition, we would like to see lower balance sheet leverage and note that 40% of the company's unsecured debt is callable later this year, likely at lower rates, in our view. We are raising our rating from Neutral to Buy and setting an $11.50 price target supported by a target P/NAV of 0.85x and a current dividend yield of 9.7%."

For an analyst ratings summary and ratings history on OFS Capital click here. For more ratings news on OFS Capital click here.

Shares of OFS Capital closed at $9.90 yesterday.

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