WhiteHorse Finance Analyst Cuts Forecast After Q4 Results: Dividend Cut Soon?

Shares of WhiteHorse Finance Inc WHF remained volatile after the company announced its fourth-quarter results.

The company's dividend policy is in focus after its NII (net interest income) fell short of expectations, according to JPMorgan.

The WhiteHorse Finance Analyst: Analyst Melissa Wedel reaffirmed an Underweight rating, while reducing the price target from $9.50 to $9.00.

The WhiteHorse Finance Thesis: The company reported its fourth-quarter NII at 34 cents per share. It missed the consensus of 39 cents per share.

NAV (net asset value) declined by 3.6% sequentially to $12.31 per share, Wedel said in a note.

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Management declared a regular quarterly distribution of 38.5 cents per share for the first quarter, the analyst stated.

She added, however, that management indicated they were still evaluating the portfolio's earnings power in the near to medium term, which leaves some doubts about the dividend being reduced, "especially with $28.4M of spillover income remaining after the special dividend was paid in 4Q."

The board may also decide to "use spillover income to supplement NII and support the dividend at current levels," Wedel stated.

"In either scenario, we expect investors will remain focused on dividend coverage through NII and credit trends with headwinds to multiple expansion until dividend coverage through NII is achieved and NAV stabilizes," she further wrote.

Price Action: Shares of WhiteHorse Finance had declined by 0.6% to $9.98 at the time of publication on Monday.

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