FBR Capital Believes TCPC Won’t Stop Here

By Austin Angelo

FBR Capital analyst Christopher Nolan reiterated a Buy rating on TCP Capital (NASDAQ: TCPC) yesterday and set a price target of $17.50. The company’s shares closed yesterday at $16.32, close to its 52-week high of $16.78.

Nolan observed:

“TCP Capital reported 3Q16 net investment income EPS of $0.39, in line with our estimate of $0.39 and slightly above the consensus mean of $0.38. Overall it was a good quarter, with earnings affected by higher earning asset volumes and prepayment volumes, offset by higher share count following a $35M registered direct equity offering in July. Overall asset quality stayed steady and NAV/share grew slightly since 2Q16. In 4Q16, we are modeling for an increase in earning asset volumes as TCPC continues to put its newly raised equity to work. We expect excess balance sheet liquidity to be used to pay down debt, lowering regulatory leverage ratios in 4Q16, and expect portfolio yields and asset quality to remain steady in 3Q16. We reiterate our forward EPS estimates and $17.50 price target. Appreciation to our price target and TCPC’s 9% dividend yield imply total return potential of about 17% in the next 12 months.”

According to TipRanks.com, Nolan is a 1-star analyst with an average return of -2.4% and a 51.4% success rate. Nolan covers the Financial sector, focusing on stocks such as Hercules Technology Growth Capital, Pennantpark Investment Corp., and Atlantic Capital Bancshares.

Currently, the analyst consensus on TCP Capital is Strong Buy and the average price target is $17, representing a 4.2% upside.

In a report released yesterday, D.A. Davidson also reiterated a Buy rating on the stock with a $18 price target.

TCP Capital’s market cap is currently $827.5M and has a P/E ratio of 15.25. The company has a book value ratio of 1.1075.

Based on the recent corporate insider activity of 13 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of TCPC in relation to earlier this year. Most recently, in May 2016, Paul L. Davis, the CFO of Issuer and Advisor of TCPC bought 500 shares for a total of $7,240.

TCP Capital Corp. is an externally managed, closed-end and non-diversified management investment company. The Company invests primarily in the debt of middle-market companies as well as small businesses, including senior secured loans, junior loans, mezzanine debt and bonds. Its investment objective is to seek to achieve high total returns through current income and capital appreciation, with an emphasis on principal protection. TCP Capital was founded on April 2, 2012 and is headquartered in Santa Monica, CA