Horizon Technology Finance (NASDAQ:HRZN)‘s stock had its “neutral” rating reaffirmed by equities researchers at National Securities in a report released on Friday. They presently have a $11.00 target price on the investment management company’s stock. National Securities’ price target would suggest a potential downside of 2.83% from the stock’s previous close.
The analysts wrote, “ Horizon posted NII/share of $0.30 for 3Q18, matching both our estimate as well as the quarterly dividend. The company had $24.2 million of originations versus sales and repayments of $11.9 million.
Notably, the SLF, which began in 1Q18, was flat on the quarter. Horizon didn’t give a lot of detail on why the JV didn’t grow but the on-balance sheet portfolio did. We expect that Arena (their partner) didn’t approve of the loans sourced during the quarter to go into the SLF. Going forward, we expect the SLF will be a tailwind for yield and earnings for HRZN.
The company introduced a breakpoint on the base fee along with the shareholder approval to increase leverage. HRZN will earn 160 bps on gross assets less cash over $250.0 million and 200 bps on assets less cash up to $250.0 million. This will enable shareholders to benefit from the reduced asset coverage, although we note that the breakpoint is not contingent on D/E but rather total assets less cash.
NAV/share was up 6 cents on the quarter to $11.66 as Horizon continues to have no investments on non-accrual and has not had non-accruals for all of 2018. The company will likely need to continue to exercise more caution going forward. On the earnings call, management noted that some of the deterioration in terms we have become accustomed to seeing in the middle market have made their way into venture lending as well.
HRZN has made good strides since 2017 with cleaning up its portfolio and improving dividend coverage. However, we think shares are in proximity to fair value as our $11 price target represents a 7% discount to our 4Q19 NAV/share estimate which we think is warranted for a small venture lender.”
Other equities research analysts have also issued research reports about the company. Compass Point lowered Horizon Technology Finance from a “neutral” rating to a “sell” rating in a research report on Wednesday, August 1st. TheStreet raised Horizon Technology Finance from a “c” rating to a “b-” rating in a research report on Tuesday, July 10th. Keefe, Bruyette & Woods lowered Horizon Technology Finance from a “market perform” rating to an “underperform” rating and dropped their price target for the stock from $10.50 to $10.00 in a research report on Sunday, October 21st. Finally, Zacks Investment Research lowered Horizon Technology Finance from a “hold” rating to a “sell” rating in a research report on Friday, August 3rd. Three analysts have rated the stock with a sell rating, two have assigned a hold rating and two have assigned a buy rating to the company’s stock. Horizon Technology Finance presently has a consensus rating of “Hold” and a consensus target price of $11.50.
NASDAQ HRZN opened at $11.32 on Friday. The stock has a market cap of $130.55 million, a PE ratio of 10.48 and a beta of 0.83. Horizon Technology Finance has a one year low of $9.92 and a one year high of $11.97.
Horizon Technology Finance (NASDAQ:HRZN) last released its quarterly earnings results on Tuesday, October 30th. The investment management company reported $0.30 EPS for the quarter, topping the Zacks’ consensus estimate of $0.29 by $0.01. The company had revenue of $7.80 million for the quarter, compared to analyst estimates of $7.70 million. Horizon Technology Finance had a return on equity of 9.14% and a net margin of 43.19%. Research analysts forecast that Horizon Technology Finance will post 1.19 EPS for the current year.
About Horizon Technology Finance
Horizon Technology Finance Corporation is a business development company specializing in lending and and investing in development-stage investments. It focuses on making secured debt and venture lending investments to venture capital backed companies in the technology, life science, healthcare information and services, and cleantech industries.
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