What Happened?
Shares of business development company New Mountain Finance (NASDAQ: NMFC) fell 2.3% in the morning session after the stock extended its negative momentum as BofA Securities downgraded the stock and slashed its price target.
The firm lowered its rating on the business development company from "Buy" to "Underperform" and cut its price target to $10.00 from $11.75. BofA Securities analyst Derek Hewett cited expectations of continued profitability challenges due to multiple headwinds. The firm's analysis suggested these challenges could potentially lead to a "dividend reset and lower share valuation" for New Mountain Finance. The stock was also trading ex-dividend on the same day, which can contribute to a price decline.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy New Mountain Finance? Access our full analysis report here, it’s free.
What Is The Market Telling Us
New Mountain Finance’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 4.2% on the news that Bank of America Securities downgraded the stock's rating from "Buy" to "Underperform" and slashed its price target.
New Mountain Finance is down 14.7% since the beginning of the year, and at $9.67 per share, it is trading 19.8% below its 52-week high of $12.05 from September 2024. Investors who bought $1,000 worth of New Mountain Finance’s shares 5 years ago would now be looking at an investment worth $969.91.
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