UBS Maintains a 'Buy' on MVC Capital (MVC); Shift to Equity Investments Lowers EPS

UBS maintains a 'Buy' on MVC Capital Inc. (NYSE: MVC) price target cut $1 to $16.

UBS analyst says, "EPS was less then expected since MVC made $11m of equity investments in the quarter versus our estimate of $15m of net new debt. Prepays totalled $5.4m and there was a $1.5m debt for equity conversion. The investment pipeline is weighted towards equity implying operating losses for the next 2 quarters. GAAP EPS of $0.56 benefited from unrealized appreciation mainly on Security Holdings." (FY12 EPS estimate cut from $0.41 to $0.07 and FY13 from $0.75 to $0.34)

"Exiting equity investments and redeploying proceeds into interest bearing debt investments has been slower than expected resulting in our lower EPS forecasts, but we are maintaining our Buy rating based on MVC’s unique portfolio and 30% discount to NAV. Until MVC begins exiting larger equity investments at or above their fair value the shares likely linger at a meaningful discount to book value."

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

Shares of MVC Capital Inc. closed at $12.15 yesterday.

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