Raymond James Upgrades MidCap Financial Investment Corp (MFIC) to Outperform

Raymond James analyst Robert Dodd upgraded MidCap Financial Investment Corp (NASDAQ: MFIC) from Market Perform to Outperform with a price target of $13.50.

The analyst comments "We are upgrading Midcap Financial Investment Corp. (MFIC) to Outperform based on an underappreciated valuation as well as low risk to the dividend; we are initiating a $13.50 target price. 2Q25 was strong on all fronts - a material earnings beat, solid credit quality, and a low risk of a dividend cut (relative to other BDCs). We view the risk/reward as attractive at current levels, with the stock currently trading well below book at ~0.8x. Credit quality: Non-accruals for 2Q25 rose to 2.8% and 2.0% at cost and fair value — this compares to 1.7% and 0.9% previously. This includes 10/0 bp (at cost and fair value) non-accruals from the acquired portfolios. There are currently two outstanding non-accrual investments that were brought over from the legacy portfolio from the merger (Global Eagle and Heubach). We expect MFIC to perform better that the industry for forward defaults - we are projecting approximately 125 bp in incremental tranche defaults (new non-accruals) over the next 12 months. Dividend outlook: MFIC has relatively little spillover income, which on the plus side means the board can make dividend decisions based on earnings power alone, and not have other factors mandating distribution levels. Our current projections indicate MFIC will earn the dividend every quarter over the 2025-2026 period. For 2026, this includes rotation of non-incoming producing equity (including Merx) and a rebound in deal & fee activity. We are currently projecting MFIC to under-earn the dividend slightly in 2026, but do not project a dividend cut at this time. Estimates: Our core NII/share estimates for 2025 and 2026 are $1.53 and $1.46 (previously $1.55 and $1.58)."

For an analyst ratings summary and ratings history on MidCap Financial Investment Corp click here. For more ratings news on MidCap Financial Investment Corp click here.

Shares of MidCap Financial Investment Corp closed at $11.71 yesterday.

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