Sandler O'Neill analyst Aaron James Deer upgraded Hercules Capital Inc. to "buy" largely on valuation and good fundamental trends.
Deer wrote in a Feb. 6 note the company's shares dropped to $12.12 on Feb. 5 at closing, 22% down from the shares' April 26, 2017, peak of $15.56. He said the stock's weakness reflects a general market selloff that offers an attractive entry point.
Expecting the venture lending environment to remain favorable, Deer has a positive outlook for Hercules Capital in 2018 given the company's leadership role in the venture debt space. He also said the company could benefit from a legislation that calls for increased capital leverage and streamlining of certain SEC offering and registration processes.
Deer said the lack of a permanent CFO after Mark Harris' "unexpected" departure poses a risk to the company's "buy" rating.
Deer placed his 12-month price target for the company's shares at $13.50. His EPS estimates for the company are $1.35 for 2018 and $1.42 for 2019.
