Analysts Love WhiteHorse Finance

After a rocky start to life as a publicly-traded company, WhiteHorse Finance (WHF) is feeling the Wall Street Love, with a number of analysts putting a Buy rating on the stock.

WhiteHorse saw its Dec. 5 IPO botched by Nasdaq, allegedly after an attempt to extend trading led to the launch being mistakenly canceled. But after opening that afternoon at $14, things have been fairly smooth for the stock, which has steadily risen to today’s $14.80 price.

Monday brought some end-of-year cheer for WhiteHorse, with four five analysts initiating their coverage, each with a Buy.

WhiteHorse is a business development company (BDC) with a focus on small-caps; its investments are managed by small-cap specialists H.I.G. Capital, an arrangement that’s a big reason why the company is looked on so favorably.

Analysts at RW Baird set a price target of $17 for WhiteHorse’s stock, and gave their reasons in a note published Monday:

WHF trades at 99% of 2012E net asset value (NAV) of $14.98/share, which is a discount to a peer group of externally managed BDCs trading at 105% of NAV. Since its IPO on December 4, WHF is down 1.4% compared to a 0.9% increase for a Baird-created index of externally managed BDCs and a 1.2% increase for the Russell 2000.

We believe WHF could ultimately trade at a premium to a peer group of externally managed BDCs given

• The scope and capability of its organization focuses solely on smaller companies.
• Its investment sourcing capabilities, which should drive growth in the investment portfolio and�earnings stream that should support attractive dividend growth over time.
• A projected ROE north of 10%, which should consistently outperform most externally managed�BDCs.

Over at Stifel Nicolaus, analysts set a price target of $16, and welcomed the H.I.G. Capital connection:

H.I.G. Capital…has an impressive platform with over $10 billion in assets under management, including approximately $5 billion in debt-oriented investments. H.I.G. has over 250 investment professionals, including 78 dedicated to debt investing. This relationship with H.I.G. will provide WHF management with a wealth of knowledge regarding specific industries, key contacts within an industry, or even company-specific information about potential investments.

WhiteHorse also received a Buy rating and $15 price target from JPMorgan, and a Buy rating and $15.50 target from BB&T Capital Markets, whose analysts added:

In 12 months, we believe the annualized dividend will still be at $1.42. Our $15.50 price target implies WHF will trade at a then-current dividend yield of 9.2% and 1.03x NAV, which is roughly in line with a current average of 9.5% and 1.03x, respectively, for paying, dividend-focused BDCs.

It should be noted that the glowing research reports have done little for the stock today, which is up a small fraction after climbing 2.6% on Friday.

Update:�Analysts at Citigroup also initiated their coverage of WhiteHorse with a Buy, with a note late Sunday setting a $16 price target for the stock.