FSKR - FS KKR Capital stock dips after Wells Fargo downgrade on rich price/NAV

FS KKR Capital (FSK) drops 4.7% after Wells Fargo analyst Finian O'Shea downgrades the stock to Underweight from Equal Weight, describing the BDC as more expensive than its sister, FS KKR Capital II ([[FSKR]] -1.2%), on a price/NAV basis.Also says FSK is "less cheap" on a normalized incentive fee, "which may be in the cards."Sees FSKR better positioned for growth.While the two companies are "broadly similar", most fundamental factors "tilt in different directions," O'Shea writes."For example, FSKR is far less leveraged, but has higher portfolio yields," he said.Notes that FS/KKR Advisor indicated its variable dividend policy will likely be permanent, on which O'Shea is mixed. "Analytically it solves the issue of chasing a dividend, but practically it allows the dividend to run down to much lower structural return levels without being addressed," he writes.Wells Fargo's $14.25 price target (increased from $13.00) for FSKR reflects a 15% net operating income yield; rates

For further details see:

FS KKR Capital stock dips after Wells Fargo downgrade on rich price/NAV