Eagle Point Credit stock target cut to $9 at KBW

Published 24/02/2025, 14:28
Eagle Point Credit stock target cut to $9 at KBW

On Monday, Keefe, Bruyette & Woods (KBW) made an adjustment to Eagle Point Credit Company’s (NYSE:ECC) financial outlook, reducing the price target from $9.50 to $9.00 while maintaining a Market Perform rating. The adjustment followed a slight miss in net investment income (NII), attributed to decreased collateralized loan obligation (CLO) income. Despite this, Eagle Point Credit’s strong cash flows were more than sufficient to cover its dividend, doing so 188% in the fourth quarter.

The company has been notably active in the CLO space, completing 16 resets in the fourth quarter. The net asset value (NAV) exhibited greater stability this quarter, with a modest decrease of 0.7%. However, over the course of 2024, the NAV experienced a more significant decline of 9.0%. With a healthy current ratio of 1.71, leverage ratios saw an uptick, reaching 0.54x debt-to-equity, while the company raised its leverage target to 0.275x-0.375x debt-to-assets, with current levels slightly exceeding the target at 0.38x debt-to-assets. According to InvestingPro, the company’s revenue growth stands at an impressive 29.26% for the last twelve months.

The KBW analyst expects Eagle Point Credit to continue its vigorous engagement in CLO investments and resets. The revised estimates are influenced by an anticipated lower effective yield. The new price target of $9.00 is based on a target earnings yield of 11.4%, which equates to 8.7 times the price-to-earnings (P/E) ratio on the company’s 2025 estimate, compared to the current P/E ratio of 14.27. This target price reflects a multiple of 1.08 times the company’s NAV as of January 31, which was reported at $8.33. For deeper insights and additional analysis, access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 US equities with expert analysis and actionable intelligence.

In other recent news, Eagle Point Credit Co Inc. disclosed an estimated net asset value (NAV) per share of its common stock, ranging from $8.28 to $8.38 as of January 31, 2025. The company also announced monthly distributions of $0.14 per share to be paid at the end of April, May, and June 2025. Previously, Eagle Point Credit reported an estimated NAV per share between $8.33 and $8.43 as of December 31, 2024, along with quarterly net investment income estimated between $0.23 and $0.27 per share. Additionally, the company has successfully closed a $100 million offering of 7.75% notes due 2030, with an option for underwriters to purchase an additional $15 million. This issuance is part of Eagle Point Credit’s strategy to secure capital, with the notes listed on the New York Stock Exchange under the symbol "ECCU." These notes are unsecured and will rank equally with the company’s existing unsecured debts. The company has retained the ability to issue additional notes with the same terms as the current offering. Eagle Point Credit’s financial disclosures provide investors with insights into its financial health and strategic capital management.

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