UPDATE: Bank Of America Reiterates On Apollo Investment Given Somewhat Sluggish Backdrop

In a report published Tuesday, Bank of America analyst Kenneth Bruce reiterated a Neutral rating on Apollo Investment (NASDAQ: AINV), but lowered the price target from $9.00 to $8.75.

In the report, Bank of America noted, “We believe Apollo Investment (AINV) is fairly valued at 1.0x NAV given our revised profitability outlook. Near term balance sheet growth is governed by leverage constraints since the capital market is largely closed to the BDC sector given current valuations. That said, we think AINV can still generate mid-single-digit revenue growth from balance sheet optimization since roughly 30% of the portfolio is lower yielding and/or liquid secondary investments.

"As AINV rotates the portfolio and replaces these subscale assets with higher yielding primary investments, we think the company can mitigate yield compression and modestly grow the top line. Though AINV's management team has made good progress the last couple of years restructuring the balance sheet, we do not expect earnings growth, despite the benefit from fee concessions, in this somewhat sluggish environment. Reiterate Neutral rating.”

Apollo Investment closed on Monday at $8.53.