Golub Capital BDC (NASDAQ:GBDC)‘s stock had its “buy” rating reaffirmed by equities research analysts at National Securities in a research report issued on Monday. They presently have a $22.00 price target on the investment management company’s stock. National Securities’ price objective indicates a potential upside of 21.41% from the company’s previous close.
The analysts wrote, “ GBDC earned core NII/share of $0.32 for F1Q19, matching our estimate and the quarterly dividend. The company didn’t recognize any dividend income from the SLF during the quarter although earnings were not impacted due to the incentive fee structure. Incentive fees declined to $2.0mm from $3.7mm Q/Q.
Despite the government shutdown and potential bottleneck with the SEC Golub is still targeting the 6/30/19 quarter for its merger with its nontraded BDC, Golub Capital Investment Corp. (GCIC). We estimate that the merger will bring NAV/share up to $16.64 from $16.04 Q/Q for an increase of 3.7% and that GBDC’s portfolio at fair value will also increase to $3.52 billion from $1.93 billion Q/Q.
As we’ve previously noted, the merger is likely to be a win-win for both GBDC and GCIC shareholders. GBDC shareholders will have enhanced liquidity, NAV accretion, and a larger portfolio with a company that has 96% overlap. GCIC shareholders also get a liquidity event and a stock that trades generally 15% above NAV. We expect the merger process to be relatively seamless, although we note that a renewed government shutdown could potentially delay the process as the SEC would be closed again.
We think Golub has several advantages and levers for growth through F2019 and F2020. The volatility in the BSL (broadly syndicated loan market) likely means the certainty of close Golub provides will be more appealing to sponsor-backed companies. Additionally, we think that there will be less of a lag between spread widening in the BSL and the upper middle market (UMM) where Golub typically makes loans relative the core and lower middle market. This should enable GBDC to realize higher effective yields should volatility return (which we expect it will).
We are revising our fiscal 2019 core NII/share estimate to $1.30 from $1.32 and maintaining our fiscal 2020 core NII/share estimate of $1.34. We are reiterating our BUY rating and our $22 price target. “
Several other research analysts have also commented on the company. BidaskClub lowered Golub Capital BDC from a “buy” rating to a “hold” rating in a research report on Tuesday, December 4th. Zacks Investment Research upgraded Golub Capital BDC from a “hold” rating to a “buy” rating and set a $21.00 price target for the company in a research report on Monday, December 3rd.
GBDC opened at $18.12 on Monday. The stock has a market capitalization of $1.09 billion, a P/E ratio of 14.05, a P/E/G ratio of 6.94 and a beta of 0.66. Golub Capital BDC has a 12 month low of $16.21 and a 12 month high of $19.89. The company has a quick ratio of 1.28, a current ratio of 1.28 and a debt-to-equity ratio of 1.00.
Golub Capital BDC (NASDAQ:GBDC) last released its quarterly earnings results on Wednesday, February 6th. The investment management company reported $0.32 EPS for the quarter, hitting the Thomson Reuters’ consensus estimate of $0.32. The company had revenue of $39.41 million during the quarter, compared to analyst estimates of $39.39 million. Golub Capital BDC had a return on equity of 8.03% and a net margin of 50.99%. During the same quarter last year, the business posted $0.32 earnings per share. Analysts anticipate that Golub Capital BDC will post 1.3 earnings per share for the current year.
A number of hedge funds and other institutional investors have recently made changes to their positions in the business. Neuberger Berman Group LLC lifted its stake in Golub Capital BDC by 1.3% in the third quarter. Neuberger Berman Group LLC now owns 49,799 shares of the investment management company’s stock worth $933,000 after purchasing an additional 658 shares during the last quarter. San Francisco Sentry Investment Group CA lifted its stake in Golub Capital BDC by 7.4% in the fourth quarter. San Francisco Sentry Investment Group CA now owns 12,185 shares of the investment management company’s stock worth $201,000 after purchasing an additional 835 shares during the last quarter. WealthTrust Arizona LLC bought a new stake in Golub Capital BDC in the fourth quarter worth about $27,000. Legal & General Group Plc lifted its stake in Golub Capital BDC by 1.9% in the third quarter. Legal & General Group Plc now owns 241,182 shares of the investment management company’s stock worth $4,525,000 after purchasing an additional 4,382 shares during the last quarter. Finally, Cullen Frost Bankers Inc. lifted its stake in Golub Capital BDC by 11.6% in the fourth quarter. Cullen Frost Bankers Inc. now owns 48,648 shares of the investment management company’s stock worth $803,000 after purchasing an additional 5,053 shares during the last quarter. 40.01% of the stock is owned by institutional investors and hedge funds.
About Golub Capital BDC
Golub Capital BDC, Inc is a business development company and operates as an externally managed closed-end non-diversified management investment company. It invests in debt and minority equity investments in middle-market companies that are, in most cases, sponsored by private equity investors. The company seeks to invest in the United States.
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