MVC shares rise in wake of earnings

Shares of business development company MVC Capital Inc. rose Monday after analysts took positive views of its earnings report issued late last week.

Morgan Joseph analyst Michael French said MVC's net asset growth was better than expected. He has a "Buy" rating on the company and set a 12-month price target of $18.50, or 27 percent above last Friday's close.

RBC Capital Markets analyst Jon Arfstrom said that despite the company's operating loss, it enjoyed a strong quarter because of higher portfolio valuations.

"This was a good quarter for the company with continued strength in the fundamental performance of portfolio companies offsetting the sluggish growth environment," Arfstrom said in a note to investors.

MVC provides financing to small- to mid-sized companies through private debt and equity investments.

MVC shares gained 60 cents, or 4.1 percent, to close at $15.14.

The Purchase, N.Y.-based company last Thursday reported a $1.4 million net operating loss for the third quarter ended July 31, down from income of $2 million for the same period a year earlier. Excluding $3.9 million accrued for incentive compensation, net operating income for the quarter was $2.6 million.

What impressed analysts was net assets at the end of the quarter of $417.5 million, or $17.18 per share, up 14.7 percent from $363.5 million, or $14.98 per share, a year earlier.

"Strong NAV growth remains the story," said Arfstrom, who forecast 15 percent net asset growth for fiscal 2008.