Oppenheimer downgrades Saratoga Investment on recent credit stress

Oppenheimer downgraded Saratoga Investment to Perform from Outperform with a price target of $23, down from $24, following the fiscal Q4 report. Saratoga’s two-year average return on equity reflects recent credit stress, the analyst tells investors in a research note. The firm says the company had three investments on non-accrual, flat from the prior quarter, and currently has 1.7% of the total portfolio rated yellow or below. It estimates Saratoga’s current loss-adjusted book value range is $20.75 to $23.70 per share, and with the stock trading around $23.55, “this implies that the market is pricing in 4.3% losses from a potential recession,” contends Oppenheimer.