TPVG - Hercules Capital upgraded to Overweight at Piper Sandler after recent selloff

2023-04-06 10:12:30 ET

Hercules Capital ( NYSE: HTGC ) stock rose 1.6% in Thursday morning trading after Piper Sandler analyst Crispin Love upgraded the business development company to Overweight as it stands to benefit from near-term growth opportuntities and the rate outlook over the next several years.

In the past month, HTGC shares slid 17%, steeper than peer TriplePoint Venture Growth BDC's ( TPVG ) 9.5% drop, and contrasting with the S&P 500's 0.5% increase.

The recent Silicon Valley Bank failure should allow Hercules ( HTGC ) to deepen relationships with borrowers and create new leads for relationships, Love said. He also notes that the company has managed credit quality well in the course of its history while some of its competitors have had difficulties in recent quarters.

In addition, the rate outlook over the next several quarters should drive net investment income higher, the analyst said.

"We continue to believe the VC ecosystem will be under scrutiny as deal activity has slowed, but we believe Hercules is the best opportunity in the venture lending space currently," Love wrote.

The Overweight rating aligns with the SA Quant system's Strong Buy ranking on Hercules ( HTGC ) and agrees with the average Wall Street rating of Buy.

See why SA contributor On the Pulse calls HTGC's recent selloff a "once-in-a decade opportunity for investors seeking passive income."

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