SWK Holdings (SWKH) AI Stock Analysis

• Market Cap: $211.36M
• Dividend Yield: N/A
• Average Volume (3M): 8.09K
• Price to Earnings (P/E): 14.6
• Beta (1Y): 0.19
• Revenue Growth: 23.75%
• EPS Growth: -5.64%
• Country: US
• Employees: 24
• Sector: Financial
• Sector Strength: 84
• Industry: Asset Management
• EPS (TTM): 1.18
• Shares Outstanding: 12,252,816
• 10 Day Avg. Volume: 10,838
• 30 Day Avg. Volume: 8,085
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 8.17
• Price to Cash Flow (P/CF): 8.40
• P/FCF Ratio: 8.20
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $21.00
• Price Target Upside: 22.52% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

SWK Holdings scores well with solid financial performance, positive technical indicators, and optimistic earnings call sentiment. The company's robust cash flow, low leverage, and strategic financial maneuvers enhance its stability. While the P/E ratio is reasonable, the absence of a dividend yield could deter income investors. Nonetheless, the overall outlook remains positive, driven by strong fundamentals and strategic growth initiatives.

Positive Factors

Analyst Rating

The analyst reiterates a Buy rating, expecting stock price appreciation of about 22% to the $21 price target.

Credit Quality Improvement

SWKH resolved its three most troublesome non-accrual loans, freeing up capital to be invested in earning assets, and credit quality is regarded as stable.

Negative Factors

Earnings Performance

SWKH's 3Q24 results missed estimates due to a 3.6% reduction in earning assets and a 171 basis point narrowing of the net interest margin to 12.59%.

Investment Portfolio Reduction

Management has made substantial portfolio moves to improve credit quality in its loan portfolio and monetize its royalties portfolio, which should decrease the size of the investment portfolio by about 17%, thus lowering earnings power in the near term.

SWK Holdings Business Overview & Revenue Model

Company Description

SWK Holdings Corporation, a specialty finance company that focuses on the healthcare sector. It operates in two segments, Finance Receivables and Pharmaceutical Development. The company provides customized financing solutions to a range of life science companies, including companies in the biotechnology, medical device, medical diagnostics and related tools, animal health, and pharmaceutical industries, as well as institutions and inventors. It also offers non-discretionary investment advisory services to institutional clients in separately managed accounts to invest in life science finance. In addition, the company engages in the pharmaceutical development, formulation and manufacturing, and licensing business through the Peptelligence platform. Further, it intends to out-license its internal product pipeline to create novel formulations using its proprietary technology to develop treatments for patients and caregivers. The company was formerly known as Kana Software, Inc. and changed its name to SWK Holdings Corporation in December 2009. SWK Holdings Corporation was founded in 1996 and is headquartered in Dallas, Texas.

How the Company Makes Money

SWK Holdings makes money through its core business of providing financing solutions to healthcare companies. The company earns revenue primarily from interest income on its debt investments and potential equity gains from its equity investments. By offering tailored financing options, SWK Holdings can charge interest and fees on the loans it provides, thereby generating a steady income stream. Additionally, any appreciation in the value of its equity investments contributes to the company's earnings. The company's focus on the healthcare sector allows it to leverage its expertise and relationships in this field, which can lead to more lucrative investment opportunities and partnerships.

SWK Holdings Financial Statement Overview

Summary

SWK Holdings exhibits strong financial health with high equity ratios, positive cash flow, and robust profit margins. However, revenue growth challenges and fluctuations in cash flow suggest potential risks.

Income Statement

SWK Holdings has demonstrated strong gross and net profit margins over the TTM, with gross profit exceeding total revenue due to potentially unique accounting treatments. The company also maintains a healthy EBIT and EBITDA margin, although there is a slight decline in net income compared to the previous annual period. Revenue growth has faced challenges recently, indicating potential market pressures or competitive dynamics.

Balance Sheet

The company's balance sheet is robust, characterized by a high equity ratio and a manageable debt-to-equity ratio. This suggests strong financial stability and low reliance on external debt. Return on equity remains healthy, indicating efficient use of shareholder funds. The company's equity base has shown resilience, contributing to a strong financial foundation.

Cash Flow

SWK Holdings shows positive free cash flow growth, indicating improved cash generation capabilities. The operating cash flow to net income ratio suggests strong cash generation relative to reported profits. However, fluctuations in free cash flow and investing cash flow highlight potential risks in cash management or capital deployment strategies.

Breakdown
TTM	Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Income Statement		Total Revenue
42.59M	37.76M	41.48M	56.16M	36.71M	30.75M
	Gross Profit
34.95M	34.32M	34.53M	48.81M	32.44M	29.57M
	EBIT
18.22M	14.65M	15.48M	31.13M	9.81M	14.98M
	EBITDA
19.69M	20.66M	12.43M	37.45M	21.90M	19.93M
	Net Income Common Stockholders
12.61M	15.89M	13.49M	25.93M	5.20M	23.83M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
20.23M	4.50M	6.16M	43.90M	4.22M	12.96M
	Total Assets
215.66M	334.25M	299.62M	282.67M	273.90M	254.37M
	Total Debt
13.00K	43.13M	2.44M	8.00K	11.76M	76.00K
	Net Debt
-20.21M	38.63M	-3.71M	-42.85M	8.75M	-11.08M
	Total Liabilities
2.60M	53.94M	19.69M	15.43M	33.39M	17.84M
	Stockholders Equity
213.06M	280.31M	279.93M	267.24M	240.51M	236.53M
Cash Flow		Free Cash Flow
17.92M	14.39M	7.91M	33.22M	15.33M	18.49M
	Operating Cash Flow
18.44M	14.89M	8.20M	34.30M	19.27M	18.54M
	Investing Cash Flow
32.43M	-48.95M	-43.55M	25.76M	-35.17M	-26.72M
	Financing Cash Flow
-2.37M	33.14M	-1.36M	-20.20M	7.75M	-883.00K

SWK Holdings Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 17.14
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SWKH, the sentiment is Positive. The current price of 17.14 is above the 20-day moving average (MA) of 16.64, above the 50-day MA of 16.61, and above the 200-day MA of 16.71, indicating a bullish trend. The MACD of 0.08 indicates Negative momentum. The RSI at 55.82 is Neutral, neither overbought nor oversold. The STOCH value of 78.74 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SWKH.

SWK Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SWKH	81 Outperform	$211.36M	14.58	5.13%	―	23.75%	-5.64%
GSBD	72 Outperform	$1.44B	22.36	3.96%	14.68%	-28.04%	-69.52%
HTGC	67 Neutral	$3.33B	11.95	13.71%	8.32%	-1.49%	-29.48%
Sector *	64 Neutral	$14.46B	10.12	8.75%	4.25%	17.00%	-11.86%
TPVG	60 Neutral	$288.19M	8.76	9.26%	19.50%	22.53%	―
TCPC	58 Neutral	$657.65M	―	-8.57%	17.59%	8.24%	-207.60%
PNNT	53 Neutral	$464.91M	28.51	3.28%	12.78%	―	-66.59%

SWK Holdings Corporate Events

SWK Holdings Announces Royalty Portfolio Monetization

On March 19, 2025, SWK Holdings Corporation announced the monetization of its royalty portfolio through two transactions. ANI Pharmaceuticals exercised its buyout option on March 17, 2025, resulting in a $17.3 million payment to SWK. Additionally, SWK entered into an agreement with Soleus Capital to sell its remaining performing royalty portfolio for $34.0 million. The combined transactions total approximately $51.3 million, exceeding the portfolio’s book value by $1.0 million. SWK plans to use part of the proceeds for a cash dividend to shareholders, with details to be announced upon closing. This move underscores SWK’s strategy to realize asset value and potentially benefit stakeholders.

SWK Holdings Highlights Financial Strategies in Investor Presentation

On March 20, 2025, SWK Holdings released an investor presentation highlighting its financial strategies and performance metrics, including the use of Non-GAAP Financial Measures for a comprehensive view of its operations. The presentation emphasized SWK’s focus on shareholder value creation, with a strategy to increase book value per share and generate current income. In March 2025, SWK monetized its performing royalty for $51.3 million and plans to announce a dividend upon closing, reflecting its commitment to enhancing shareholder returns.