Why This Crescent Capital BDC Analyst Is Bullish

Crescent Capital BDC Inc CCAP has been gaining share in the middle market, where demand for capital “remains robust,” according to BofA Securities.

The Crescent Capital BDC Analyst: Derek Hewett initiated coverage of Crescent Capital BDC with a Buy rating and a price target of $19.50.

The Crescent Capital BDC Thesis: The company seems well-positioned to benefit from the growing gap between capital demand and supply in the middle market, Hewett said in the initiation note.

“Credit metrics have largely outperformed peers since inception. And asset quality trends in the liquid credit markets, a proxy for BDC credit, suggest defaults should remain relatively low for the foreseeable future,” the analyst wrote.

He further mentioned Crescent Capital BDC’s portfolio “could be better positioned than peers” when credit markets worsen.

“Our earnings outlook implies CCAP can generate an 8% ROE, an attractive risk-adjusted return given CCAP’s investment strategy and current valuation,” Hewett added.

CCAP Price Action: Shares of Crescent Capital BDC had risen by 1.40% to $18.08 at the time of publication Monday morning.

Image by Gerd Altmann from Pixabay