Horizon Technology Finance Corporation (HRZN)
NASDAQ (NGS) NASDAQ (NGS) Primary 
Horizon Technology: The Level Of Speculation Has Increased After Q3
I have been covering Horizon Technology since December 2023, when I issued my first bearish thesis, indicating the risks are too high and the yield does not justify them. Since then, HRZN has underperformed the BDC index by ~29%, even though the dividend has remained intact. In this article, I assess the Q3 2024 earnings report and explain why, in my opinion, the BDC is still too risky to enter.
Horizon Technology Finance (HRZN) Q3 2024 Earnings Call Transcript
Horizon Technology Finance (NASDAQ:HRZN ) Q3 2024 Earnings Conference Call October 30, 2024 9:00 AM ET Company Participants Megan Bacon - Director, Investor Relations and Marketing Robert Pomeroy - Chairman and CEO Jerry Michaud - President Dan Devorsetz - COO and CIO Dan Trolio - CFO Conference Call Participants Douglas Harter - UBS Bryce Rowe - B. Riley Securities Christopher Nolan - Ladenburg Thalmann Paul Johnson - KBW Operator Greetings, and welcome to the Horizon Technology Finance Corporation Third Quarter 2024 Earnings Call.
Horizon Technology Finance (HRZN) Q3 Earnings and Revenues Miss Estimates
Horizon Technology Finance (HRZN) came out with quarterly earnings of $0.32 per share, missing the Zacks Consensus Estimate of $0.35 per share. This compares to earnings of $0.53 per share a year ago.
Horizon Technology: Edging Closer To A Potential Dividend Cut
HRZN has underperformed the BDC market since my initial relatively bearish thesis back in December, 2023. After digesting Q2, 2024 earnings results, the case has gone from bad to worse. In this article I elaborate on the key reasons why I continue to remain pessimistic on HRZN and share my view on the potential dividend cut.
Horizon Technology Finance: Drop In Earnings Could Result In Distribution Cut (Rating Downgrade)
Horizon Technology Finance operates as a BDC with a dividend yield of about 12.1%, making it attractive for income investors. However, the distribution may be vulnerable. Net investment income is down on a year-over-year basis. Future interest rate cuts could further reduce NII per share. The price still trades at a high premium to NAV. I believe this premium is unjustified when looking at the portfolio's performance. A price reduction is needed.
Horizon Technology Finance (HRZN) Q2 Earnings Surpass Estimates
Horizon Technology Finance (HRZN) came out with quarterly earnings of $0.36 per share, beating the Zacks Consensus Estimate of $0.34 per share. This compares to earnings of $0.54 per share a year ago.
Horizon Technology: The Risks Have Increased, While Yield Has Remained Unattractive
Horizon Technology Finance has underperformed the BDC market by 15% since December, with worsening portfolio quality and yield compression. Q1, 2024 earnings report shows continued decline in net investment income, with NAV dropping and portfolio stagnating at lower yield levels. Despite sourcing fresh equity, HRZN's underlying portfolio profile has deteriorated, making it still a risky investment choice with uncertain fundamentals.
Horizon Technology Finance: Attractive Price Entry Offset By Drop In Portfolio Quality
Horizon Technology Finance has a dividend yield of 11.4% and distributions are issued on a monthly basis, making this an attractive choice for income investors. The price has come since Q4 of 2023 due to the worsening credit quality of investment portfolio. This could be offset by investments made in Q1 of 2024. The price trades at a premium to NAV of nearly 20%, despite the price drop.
