Prospect Capital (NASDAQ:PSEC) Stock Price Target Cut by Wells Fargo & Company

Key Points

• Wells Fargo cut its Prospect Capital price target from $2.00 to $1.50 and maintained an “underweight” rating; the target implies 13.21% upside from the prior close. The broader analyst consensus is “Sell,” with a $1.50 price target.
• Prospect Capital reported quarterly earnings of $0.15 per share, above the $0.10 consensus estimate, but revenue of $151.74 million fell short of expectations of $163.14 million.
• Investors also face concerns about the company’s weak share-price trend and the sustainability of its high dividend yield, amid reports of a shrinking investment portfolio.

Prospect Capital (NASDAQ:PSEC - Get Free Report) had its target price lowered by analysts at Wells Fargo & Company from $2.00 to $1.50 in a report released on Friday, Benzinga reports. The brokerage presently has an "underweight" rating on the financial services provider's stock. Wells Fargo & Company's price target would indicate a potential upside of 13.21% from the stock's previous close.

Several other equities research analysts have also commented on PSEC. Weiss Ratings lowered shares of Prospect Capital from a "sell (d+)" rating to a "sell (d)" rating in a report on Wednesday, August 26th. Wall Street Zen downgraded shares of Prospect Capital from a "buy" rating to a "hold" rating in a research note on Saturday, August 22nd. Finally, Zacks Research upgraded shares of Prospect Capital to a "hold" rating in a research note on Monday, October 5th. One equities research analyst has rated the stock with a Hold rating and two have issued a Sell rating to the company's stock. According to MarketBeat.com, the stock has a consensus rating of "Sell" and a consensus price target of $1.50.

Prospect Capital Price Performance

PSEC opened at $1.32 on Friday. Prospect Capital has a 12-month low of $1.38 and a 12-month high of $3.12. The company has a current ratio of 0.87, a quick ratio of 0.87 and a debt-to-equity ratio of 0.64. The business's fifty day simple moving average is $1.91 and its 200-day simple moving average is $2.34. The company has a market capitalization of $707.31 million, a price-to-earnings ratio of -8.76 and a beta of 0.84.

Prospect Capital (NASDAQ:PSEC - Get Free Report) last released its quarterly earnings data on Wednesday, November 4th. The financial services provider reported $0.15 earnings per share for the quarter, topping analysts' consensus estimates of $0.10 by $0.05. Prospect Capital had a net margin of 3.80% and a return on equity of 13.19%. The company had revenue of $151.74 million during the quarter, compared to analyst estimates of $163.14 million. On average, equities research analysts anticipate that Prospect Capital will post 0.38 earnings per share for the current fiscal year.

Insider Transactions at Prospect Capital

In other news, CEO John Barry. III bought 1,217,105 shares of Prospect Capital stock in a transaction on Friday, September 4th. The stock was acquired at an average cost of $2.24 per share, for a total transaction of $2,726,315.20. Following the completion of the acquisition, the chief executive officer owned 90,479,988 shares of the company's stock, valued at $202,675,173.12. This trade represents a 1.36% increase in their position. The purchase was disclosed in a filing with the SEC, which can be accessed through the SEC website. 25.94% of the stock is owned by company insiders.

Institutional Inflows and Outflows

Institutional investors and hedge funds have recently modified their holdings of the company. Private Management Group Inc. raised its stake in Prospect Capital by 51.7% in the second quarter. Private Management Group Inc. now owns 20,534,804 shares of the financial services provider's stock valued at $47,435,000 after buying an additional 6,999,513 shares during the last quarter. Legal & General Group Plc acquired a new stake in Prospect Capital in the second quarter worth about $9,336,000. Independent Financial Group LLC acquired a new stake in Prospect Capital in the first quarter worth about $8,644,000. Van ECK Associates Corp grew its stake in shares of Prospect Capital by 32.7% during the second quarter. Van ECK Associates Corp now owns 9,685,724 shares of the financial services provider's stock worth $22,374,000 after acquiring an additional 2,388,990 shares during the last quarter. Finally, Concorde Asset Management LLC purchased a new stake in shares of Prospect Capital during the second quarter worth about $838,000. Hedge funds and other institutional investors own 9.06% of the company's stock.

Prospect Capital News Roundup

Here are the key news stories impacting Prospect Capital this week:

• Positive Sentiment: PSEC reported first-quarter fiscal 2027 net investment income of $0.15 per share, topping the $0.10 consensus estimate. Management also highlighted its credit profile and authorized a $200 million common-share repurchase program, which could support the shares if the company carries it out. Earnings call highlights
• Neutral Sentiment: The company announced monthly dividends of $0.035 per share for the coming payment dates. The roughly 30% indicated annual yield may appeal to income investors, though the high yield also raises questions about how sustainable the payout is. September results and repurchase announcement
• Negative Sentiment: Revenue of $151.74 million missed the $163.14 million consensus estimate. Net investment income was down from $0.17 per share a year earlier, and the company reported a $21 million quarterly loss, tempering the per-share income beat. Fiscal Q1 earnings snapshot
• Negative Sentiment: Concerns about a shrinking investment portfolio and the sustainability of PSEC’s unusually high dividend yield may weigh on investor sentiment, particularly against the stock’s weak price trend. Analysis of yield and portfolio trends

About Prospect Capital

Prospect Capital Corporation NASDAQ: PSEC is a business development company that provides financing and investment capital to middle-market companies. The company primarily invests in privately held businesses through first-lien and second-lien loans, mezzanine debt, and other debt securities, while also making equity and equity-related investments in selected companies.

Prospect Capital invests across a range of industries and has additional exposure to areas such as real estate, structured credit, and financial services.

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