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On Wednesday, Keefe, Bruyette & Woods (KBW) adjusted their financial outlook for Portman Ridge Finance Corp. (NASDAQ: NASDAQ:PTMN), reducing the price target to $16.00 from the previous $18.00. The firm retained a Market Perform rating for the business development company’s stock. The revision follows Portman Ridge’s earnings release on March 13, which prompted KBW to update their estimates.
The new estimates for Portman Ridge’s earnings were set at $2.25 and $2.18, down from $2.52 and $2.49, respectively. The decrease in estimates is attributed to a combination of factors including increased non-accruals, a lower portfolio yield, and a reduced return on equity (ROE) stemming from the upcoming merger with Logan Ridge Finance Corporation (LRFC). The company, with a market capitalization of $142.18 million, has seen its stock decline by 8.31% over the past week.
Portman Ridge announced modifications to its dividend policy in light of these financial changes. The company has lowered its quarterly dividend to a base of $0.47, marking a 32% reduction. Additionally, a supplemental dividend of $0.07 was declared, which will be contingent on 50% of the net investment income (NII) exceeding the base dividend amount. Despite the reduction, InvestingPro data shows the stock still offers a substantial 17.86% dividend yield, maintaining its 19-year streak of consecutive dividend payments.
The merger with Logan Ridge Finance Corporation is anticipated to be finalized in the second quarter of 2025. This strategic move is expected to influence Portman Ridge’s financial performance and was a significant factor in the revised earnings estimates and price target adjustment by KBW. The company maintains a strong liquidity position with a current ratio of 5.06, indicating robust financial health to support the merger transition.
In other recent news, Portman Ridge Finance Corporation reported its fourth-quarter 2024 earnings, revealing that its earnings per share (EPS) fell short of expectations at $0.60, compared to the projected $0.65. The company’s revenue also missed forecasts, coming in at $14.4 million against the anticipated $15.56 million. These results indicate potential challenges in meeting market expectations. Additionally, Portman Ridge announced a proposed merger with Logan Ridge Finance Corporation, which is expected to enhance its market position. Analysts from firms like Ladenburg have been actively engaging with the company regarding the merger’s potential cost savings and new dividend policy structure. The company has introduced a new dividend policy with a base and supplemental distribution, aiming to align more closely with industry trends. Finally, Portman Ridge’s executives have expressed confidence in their strategic priorities, including focusing on non-sponsor backed businesses and maintaining a healthy investment pipeline for 2025.
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