Blackrock Kelso Capital Corp.'s (NASDAQ:BKCC) small cap stock fell on Tuesday after analysts at equities research firm Stifel Nicolaus downgraded the company's shares.
According to a release from the company, analysts lowered the shares from a rating of "Hold" to a rating of "Sell."
"We are downgrading the shares of BlackRock Kelso to Sell as the shares are currently trading at a 9.5% earnings yield based on our 2013 estimate, a slight premium to the group which is trading a 9.7 percent yield," the firm's report, released on Tuesday, noted. "We believe it is more appropriate for BKCC to trade at a slight discount to the group based their credit quality history."
Stifel Nicolaus analysts added that the firm does not expect BKCC to cover its dividend from NOI earnings in 2012 or 2013.
"We do not think BKCC will cut its dividend, however, we tend to view any BDC who does not cover its dividend more negatively and thus recommend investors sell their BKCC shares and reinvest the proceeds," said the analysts.
By 4:15 p.m. on Tuesday, the company's stock was down 6.22 percent to $9.65.