On Friday, Raymond (NS:RYMD) James began coverage on PennantPark Floating Rate Capital (NYSE:NYSE:PFLT) with a Market Perform rating. The firm's analyst cited the company's current trade at approximately 0.94 times on a price-to-net asset value (NAV) basis, which is a slight discount to the group median of 0.98 times and the equity weighted average of 1.05 times. The shares are yielding 11.5% on a base dividend basis, which stands above the median and equity weighted average industry dividend yield projection of 10.7%.
PennantPark Floating Rate Capital's current yield is highlighted as a positive aspect, especially in the context of the broader industry. The analyst noted that the firm's general credit outlook for PFLT is favorable, and the earnings projections are expected to cover the dividend moving forward, even as interest rates begin to trend downward.
The initiation of the Market Perform rating reflects a balanced view of the stock's valuation. The analyst believes that the shares are fairly valued at this stage. This assessment takes into consideration the element of uncertainty surrounding future plans for the loan fund program managed by PennantPark.
The report from Raymond James suggests a cautious approach towards PFLT's stock, acknowledging its solid dividend yield and credit position, while also recognizing potential uncertainties. The Market Perform rating indicates that the stock is expected to perform in line with the market or its sector peers in the near future.
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