UBS Maintains a 'Neutral' on Prospect Capital (PSEC); Credit Deterioration Causes Earnings Miss

UBS maintains a 'Neutral' on Prospect Capital Corporation (NASDAQ: PSEC), price target lowered from $10 to $8.25.

UBS analyst says, "PSEC's C2Q11 core EPS was below guidance of $0.35-$0.40, which included $0.11 of nonrecurring accelerated discount accretion, due to a $59m non-accrual. The non-accrual reversed ~$2.5m of income accrued in the March quarter and accounted for an estimated $0.05 per share of the earnings shortfall. Prospect grew rapidly with another $300m+ quarter of originations, but earnings have yet to increase since growth was funded with equity and higher cost debt. September EPS guidance of $0.25-$0.30 is inline with expectations and includes $0.01 of expected discount accretion."

For more ratings news on Prospect Capital Corporation click here and for the rating history of Prospect Capital Corporation click here.

Shares of Prospect Capital Corporation closed at $8.78 yesterday.

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