Analyst Michael Diana of Maxim Group reiterated a Buy rating on Saratoga Investment, reducing the price target to $25.00.
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Michael Diana has given his Buy rating due to a combination of factors including the anticipated growth in Saratoga Investment’s portfolio, which is expected to support earnings per share (EPS) and net investment income (NII) sufficient to cover the dividend in the coming quarters. Although the current NII of $0.58 is below the quarterly dividend of $0.75, the EPS of $0.84 exceeds the dividend, indicating a positive outlook for future earnings.
Despite lowering the price target to $25 from $27, Diana maintains a Buy rating as the investment portfolio is positioned for growth, and the company has substantial liquidity to support this expansion. The credit quality remains solid, with only one loan on non-accrual, and the leverage ratio has improved. The expected dividend yield of 13.5% and potential stock price appreciation contribute to the positive recommendation, aligning the price target with relevant peers in the sector.