U.S. stocks edge higher; solid earnings season continues
On Thursday, Keefe, Bruyette & Woods revised their price target for Eagle Point Credit Company (NYSE:ECC) shares, bringing it down to $7.50 from the previous $9.00 while maintaining a Market Perform rating on the stock. This adjustment comes in the wake of a volatile quarter for the company, which saw a significant decline in its net asset value (NAV).
Eagle Point Credit’s NAV experienced a 14% decrease in the first quarter of 2025, primarily due to mark-to-market losses. Despite this setback, the company’s cash earnings remained robust, continuing to cover its dividend payout at a rate of 134%. Notably, InvestingPro data shows the company maintains an impressive 23.94% dividend yield and has consistently paid dividends for 12 consecutive years. The analyst noted that while net investment income (NII) fell slightly short of expectations, the potential for recovery exists as leveraged loan prices have shown improvement since March.
The Loan Syndications and Trading Association (LSTA) Index, which tracks the performance of leveraged loans, stood at 96.6, a slight rise from 96.3 at the end of March and a more substantial increase of 2 points from its lowest level in April. However, the analyst pointed out that Eagle Point Credit’s NAV was still down by 6.5% in April from the end of the first quarter of 2025.
One of the contributing factors to the company’s challenges this quarter has been its lower deployment, with only $4 million in new investments during a period of market volatility, limiting the company’s trading opportunities. As a result of these conditions and the downward adjustment of expected effective yield, the firm has also reduced their earnings estimates for Eagle Point Credit.
The revised price target and earnings estimates reflect the impact of the decline in NAV and the revised expectations for the company’s financial performance. The commentary from Keefe, Bruyette & Woods suggests that while there are elements that could support a recovery in the value of Eagle Point Credit’s assets, current market conditions and company-specific factors have necessitated a more conservative outlook.
In other recent news, Eagle Point Credit Co Inc. has released unaudited estimates for its net asset value (NAV) per share for the first quarter ending March 31, 2025. The NAV is projected to be between $7.18 and $7.28. Additionally, the company has provided an estimate of its net investment income and realized gain/loss per share for the same quarter, which is anticipated to range from $0.31 to $0.35. These figures are based on management’s estimates and have not been independently verified. Earlier, Eagle Point Credit also disclosed an estimated NAV per share between $7.97 and $8.07 as of February 28, 2025. This information was submitted in a recent SEC filing, aligning with the company’s practice of offering timely financial updates. The NAV is a critical metric for investors, as it represents the company’s total assets minus its liabilities. Eagle Point Credit has not provided forward-looking statements or guidance regarding future performance in its recent disclosures.
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