PennantPark Investment (PNNT) Path to Multiple Expansion - Raymond James

September 24, 2021 8:15 AM EDT
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Price: $6.79 +0.59%

Rating Summary:
    7 Buy, 11 Hold, 1 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 15 | Down: 25 | New: 91
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Raymond James analyst Robert Dodd reiterated an Outperform rating on PennantPark Investment (NASDAQ: PNNT) noting that the strong relationship between dividend yield and valuation, portfolio rotation (and subsequent earnings growth) at PNNT could be the key catalyst to P / NAV expansion.

The analyst stated "The pathway to P / NAV expansion: two milestones. 1). Rotate the portfolio. At C2Q21-end, equity (excl. PSLF) was 31% of the PNNT portfolio at fair value ($350M) — the highest under our coverage and 3x the long-term PNNT target of 10%. 3). Deploy & grow the dividend. For illustrative purposes, portfolio rotation of $125M would take equity to 20% of the total portfolio — still 2x the target. Deployment at 8% yields would increase Core NII / Share by $0.02-0.03 a quarter. The risk? PNNT does not control the timing is here. Net / net: Total returns and NAV / Share have outperformed on a L4Q basis — yet the bulk of NAV gains have been in equity and not yet exited. The key to P / NAV expansion: rotate the portfolio, grow earnings, and grow the dividend."

For an analyst ratings summary and ratings history on PennantPark Investment click here. For more ratings news on PennantPark Investment click here.

Shares of PennantPark Investment closed at $6.46 yesterday.

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