Citigrooup Lowers 3q estimates on apollo investment corp
Citigroup has published a research report on Apollo Investment (NASDAQ: AINV) and lowered the Q3 estimates due to the increased pressure affecting valuation of the stock.
In the report, Citigroup writes, "We are lowering our estimates mid-qtr to reflect our updated expectations for FYQ3 results. We are lowering our quarterly estimate to 0.19 from 0.24 and revising our FY12 full year estimate down to 0.86 from 0.96. We are now expecting AINV's FYQ4 dividend to be reduced to 0.20, from 0.28, which equates to a 12.5% annualized yield on the current share price. Target remains $7 or 0.85x book value of $8.12."
Citigroup maintains its neutral rating and $7 price target on Apollo Investment, which is currently trading down 0.21 from yesterday's $6.48 closing price.
although, it doesn't make a lot of sense to me that the price target is $7, because even management expects the NAV to improve for this quarter. Valuations have improved on junk and senior debt. So we are talking more like $8.70 NAV right now. There is also no proof that NII will drop to 0.19, I don't know where they are getting that number. What is this? Price in worst case and rally if it isn't? lol. What about the chances of the dividend not being cut? What IF nii comes in at 0.25 or 0.26 because of they rotated into higher yielding assets from prepayments? It would make sense to me.