Oxford Square Capital (NASDAQ:OXSQ)‘s stock had its “sell” rating reaffirmed by analysts at National Securities in a report issued on Monday. They currently have a $5.00 price target on the stock. National Securities’ target price would suggest a potential downside of 22.96% from the company’s previous close.
The analysts wrote, “ For 3Q18, OXSQ posted estimated core NII/share of $0.20 versus our estimate of $0.19. Core numbers were not provided during the quarter in both the 8-K as well as the presentation and we are not sure why. However, we added back the $1.2 million in CLO equity reductions to cost in order to approximate estimated additional taxable income (EATI) and arrive at our core figures. This is unusual as OXSQ has reported this number consistently and dividend payout requirements for ’40 Act companies is based upon taxable income, not GAAP earnings or NII.
We expect credit spreads to widen due to technical factors (meaning we do not expect defaults to pick-up) from 1Q19-3Q19. As a result, core NII will likely increase significantly due to the favorable reinvestment environment afforded to CLOs but this will also cause severely negative marks on the portfolio which would cause NAV to decline. BDCs with CLO equity typically do not receive good valuations and we think the market is unlikely to discern between mark-to-market from technical dislocation versus NAV decreases from credit issues and cash flow impairment and thus we think shares will decline with NAV despite the underlying economics of the assets improving during this time.
In 2019, we think NAV/share will decline to $5.95 from our estimate of $7.47 in 4Q18 but we expect NIM to jump to 12.16% from 11.16% Y/Y. We do not expect much of a benefit in 4Q18 from recent equity market volatility as credit spreads remain stubbornly low. We remind readers that equities would need to be much more volatile for a prolonged period of time before credit is impacted to the point of improving spreads.
We are maintaining our SELL rating and $5 price target. Our $5 price target represents a 16% discount to our 4Q19 NAV/share estimate. We think is reasonable as the market will likely discount shares meaningfully if the volatility we anticipate in loan markets materializes. “
Separately, Zacks Investment Research downgraded Oxford Square Capital from a “buy” rating to a “hold” rating in a report on Wednesday, July 25th. One equities research analyst has rated the stock with a sell rating, three have assigned a hold rating and one has given a buy rating to the company. The company currently has an average rating of “Hold” and a consensus price target of $6.13.
Shares of Oxford Square Capital stock traded up $0.07 on Monday, reaching $6.49. 42,956 shares of the stock were exchanged, compared to its average volume of 230,961. The company has a quick ratio of 0.18, a current ratio of 0.18 and a debt-to-equity ratio of 0.17. Oxford Square Capital has a twelve month low of $5.15 and a twelve month high of $7.52. The company has a market capitalization of $311.37 million, a price-to-earnings ratio of 10.82 and a beta of 0.56.
Oxford Square Capital (NASDAQ:OXSQ) last released its earnings results on Tuesday, October 30th. The company reported $0.18 EPS for the quarter, topping the Zacks’ consensus estimate of $0.17 by $0.01. Oxford Square Capital had a return on equity of 8.99% and a net margin of 75.91%. The firm had revenue of $15.15 million during the quarter, compared to the consensus estimate of $14.44 million. Research analysts anticipate that Oxford Square Capital will post 0.68 EPS for the current fiscal year.
Hedge funds have recently made changes to their positions in the stock. Russell Investments Group Ltd. lifted its position in Oxford Square Capital by 80.4% during the 3rd quarter. Russell Investments Group Ltd. now owns 47,800 shares of the company’s stock worth $340,000 after acquiring an additional 21,300 shares during the period. Palo Capital Inc. acquired a new stake in Oxford Square Capital during the 3rd quarter worth approximately $149,000. Advisors Asset Management Inc. acquired a new stake in Oxford Square Capital during the 2nd quarter worth approximately $3,314,000. Bramshill Investments LLC lifted its position in Oxford Square Capital by 55.5% during the 2nd quarter. Bramshill Investments LLC now owns 124,369 shares of the company’s stock worth $858,000 after acquiring an additional 44,368 shares during the period. Finally, Millennium Management LLC lifted its position in Oxford Square Capital by 136.9% during the 2nd quarter. Millennium Management LLC now owns 136,289 shares of the company’s stock worth $940,000 after acquiring an additional 78,760 shares during the period. Institutional investors own 14.96% of the company’s stock.
About Oxford Square Capital
TICC Capital Corp. is a business development company, operates as a closed-end, non-diversified management investment company. The firm invests in both public and private companies. It invests in secured and unsecured senior debt, subordinated debt, junior subordinated debt, preferred stock, and common stock.
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