National Securities reaffirmed their buy rating on shares of Goldman Sachs BDC (NYSE:GSBD) in a research note released on Monday morning. The brokerage currently has a $22.00 price target on the financial services provider’s stock.
“▪ GSBD posted NII/share of $0.55 for 1Q19, ahead of our estimate of $0.50. The company earned a $493K incentive fee for the quarter as NAV/share slipped to $17.25 from $17.65 Q/Q.
▪ Goldman had a $24.7mm realized loss on the quarter, driven by the restructuring of former non-accrual ASC. At 12/31/18, ASC had $14.5mm of unrealized depreciation. Non-accruals at cost decreased to $76.2mm or 5.2% of the portfolio from $129.3mm or 9.1% of the portfolio Q/Q. The largest non-accrual with a cost of $56.0mm, NTS Communications, is slated to be sold pending approval from the FCC. We are unsure of what the timing will ultimately be, but Goldman is confident from conversations with the FCC that they have no reason to deny the sale of the firm.
▪ In May, Goldman and Cal Regents each contributed capital to the SCF in order repay the credit facility and buy out their pro rata portions of the assets. At 3/31/19, Goldman’s share of the assets at fair value stood at $221.8mm.
▪ The SCF is 98.8% first lien with a yield at cost of 7.6% compared with the on-balance sheet portfolio yield of 9.3%. While this is not a game changer by any means, we think it was smart for Goldman to appropriately manage their economic leverage now that they have reduced asset coverage and can also get rid of frictional costs of the JV. We think the company will use repayments of SCF assets to fund higher yielding loans, although the SCF loans have a median EBITDA of $48.8mm and likely can’t be actively sold with ease.
▪ With pricing more favorable, we expect Goldman to tap the unsecured debt market in 3Q19 with $200m of five-year notes priced at 5.25%. We expect the proceeds to pay-down the revolver balance, which was likely increased Q/Q for 2Q19 to fund the purchase of SCF assets.
▪ We are revising our 2019 NII/share estimate to $1.97 from $1.91 and our 2020 NII/share estimate to $1.92 from $1.90. We are maintaining our BUY rating and $22 price target.,” National Securities’ analyst commented.
Other research analysts have also recently issued research reports about the company. TheStreet raised Goldman Sachs BDC from a c+ rating to a b- rating in a research note on Thursday, February 21st. Wells Fargo & Co reissued a buy rating on shares of Goldman Sachs BDC in a research note on Wednesday, January 16th. Zacks Investment Research raised Goldman Sachs BDC from a strong sell rating to a hold rating in a research note on Friday, May 10th. Citigroup decreased their price target on Goldman Sachs BDC from $23.00 to $21.00 and set a neutral rating for the company in a research note on Wednesday, April 17th. Finally, Raymond James decreased their price target on Goldman Sachs BDC from $24.00 to $23.00 and set a strong-buy rating for the company in a research note on Monday, March 4th. Four research analysts have rated the stock with a hold rating and three have given a buy rating to the stock. The company has an average rating of Hold and an average target price of $22.00.
Goldman Sachs BDC (NYSE:GSBD) last released its quarterly earnings results on Thursday, February 28th. The financial services provider reported $0.56 earnings per share (EPS) for the quarter, topping the Thomson Reuters’ consensus estimate of $0.50 by $0.06. Goldman Sachs BDC had a return on equity of 12.08% and a net margin of 25.34%. The company had revenue of $35.97 million during the quarter, compared to analysts’ expectations of $37.23 million. As a group, sell-side analysts predict that Goldman Sachs BDC will post 1.91 earnings per share for the current year.
The company also recently disclosed a quarterly dividend, which will be paid on Monday, July 15th. Stockholders of record on Friday, June 28th will be issued a $0.45 dividend. The ex-dividend date of this dividend is Thursday, June 27th. This represents a $1.80 annualized dividend and a dividend yield of 8.93%. Goldman Sachs BDC’s dividend payout ratio (DPR) is 87.38%.
In other news, insider Salvatore Lentini sold 30,809 shares of the company’s stock in a transaction on Monday, March 4th. The stock was sold at an average price of $20.38, for a total value of $627,887.42. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through the SEC website. Corporate insiders own 0.30% of the company’s stock.
Several hedge funds and other institutional investors have recently made changes to their positions in GSBD. Legal & General Group Plc grew its position in Goldman Sachs BDC by 2.2% during the 3rd quarter. Legal & General Group Plc now owns 163,206 shares of the financial services provider’s stock worth $3,631,000 after purchasing an additional 3,511 shares during the last quarter. Monument Capital Management grew its position in Goldman Sachs BDC by 7.1% during the 4th quarter. Monument Capital Management now owns 58,420 shares of the financial services provider’s stock worth $1,074,000 after purchasing an additional 3,874 shares during the last quarter. Steward Partners Investment Advisory LLC purchased a new stake in Goldman Sachs BDC during the 4th quarter worth approximately $335,000. Creative Planning grew its position in Goldman Sachs BDC by 5.7% during the 4th quarter. Creative Planning now owns 10,020 shares of the financial services provider’s stock worth $184,000 after purchasing an additional 536 shares during the last quarter. Finally, Regal Investment Advisors LLC grew its position in Goldman Sachs BDC by 57.6% during the 4th quarter. Regal Investment Advisors LLC now owns 17,650 shares of the financial services provider’s stock worth $324,000 after purchasing an additional 6,450 shares during the last quarter. 34.81% of the stock is owned by institutional investors and hedge funds.
About Goldman Sachs BDC
Goldman Sachs BDC, Inc is a business development company specializing in middle market and mezzanine investment in private companies. It seeks to make capital appreciation through direct originations of secured debt, senior secured debt, junior secured debt, including first lien, first lien/last-out unitranche and second lien debt, unsecured debt, including mezzanine debt and, to a lesser extent, investments in equities.
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