Shares of KKR Financial Holdings LLC rose today after Janney Montgomery Scott Securities analysts upgraded the real estate investment trust to "Market Outperform" from "Market Perform," saying the company's management has improved liquidity and it may restore its dividend soon.
Shares of KKR Financial Holdings LLC rose Monday after Janney Montgomery Scott Securities analysts upgraded the real estate investment trust to "Market Outperform" from "Market Perform," saying the company's management has improved liquidity and it may restore its dividend soon.
Shares of San Francisco-based KKR Financial, which is operated by private equity fund Kohlberg Kravis Roberts & Co., rose 76 cents, or 24 percent, to $4.03 in afternoon trading. The stock's value has ranged between 40 cents and $9.88 in the past 12 months.
JMP analyst John Hecht put a $5 price target on KKR Financial's shares. That implies a prediction for a 54 percent increase in the stock's value over the next year.
Hecht said that by selling off investments in one collateralized loan obligation, a security backed by commercial loan portfolios, and restructuring the debt on others, KKR Financial cut down on its interest payments. He now expects the company's yearly cash flows to exceed costs by $60 million to $70 million.
An improvement in the credit markets and higher prices in the credit-related assets KKR Financial invests in will also boost liquidity, Hecht said.
He said the company should return to giving out dividends in the next few quarters. The company suspended its dividend payments last November amid a liquidity crunch.
Hecht raised his earnings estimate to 66 cents per share from 55 cents per share for the year.
