Last Update 08 Dec 25
SSSS: Portfolio Momentum And Buybacks Will Drive Shares Higher
Analysts have raised their price target on SuRo Capital by $1 to $12, citing building momentum across the company's investment portfolio as support for the higher valuation.
Analyst Commentary
Bullish Takeaways
- Bullish analysts highlight that the incremental price target increase reflects growing confidence in the durability of portfolio momentum, supporting a premium to prior valuation levels.
- Recent portfolio performance following the Q3 report is viewed as evidence that management is executing effectively on its investment strategy, underpinning expectations for continued net asset value growth.
- Improved visibility into monetization opportunities within the portfolio is seen as a catalyst for upside to earnings and capital return, which could justify further multiple expansion if successfully realized.
- Analysts note that maintaining a positive rating alongside a higher target signals conviction that the current share price still discounts the full value of the underlying portfolio.
Bearish Takeaways
- Bearish analysts caution that the modest size of the target increase suggests some lingering uncertainty around the timing and magnitude of portfolio exits and liquidity events.
- There is concern that continued momentum is partly dependent on broader market conditions for growth and late stage private companies, which could pressure valuations if sentiment weakens.
- Some analysts remain focused on execution risk, noting that converting paper gains into realized returns requires disciplined exit timing and could face delays.
- Valuation is seen as increasingly sensitive to any slowdown in portfolio performance, leaving limited room for missteps before the shares could retrace from higher target levels.
What's in the News
- Extended share repurchase program, with SuRo Capital lengthening the duration of its buyback plan to October 31, 2026. This signals a continued focus on capital return to shareholders (Key Developments).
- Completion of a substantial portion of the existing buyback authorization, with 5,990,501 shares repurchased to date, representing 28.34% of shares for $39.17 million under the program announced on August 8, 2017 (Key Developments).
Valuation Changes
- Fair Value estimate remains unchanged at $11.15 per share, indicating no revision to the intrinsic value assessment.
- The discount rate has risen slightly from 8.87% to approximately 8.91%, implying a modestly higher required return for valuing future cash flows.
- The revenue growth assumption is effectively unchanged, holding at around negative 18.29%, signaling continued expectations for revenue contraction.
- The net profit margin forecast remains stable at roughly 39.18%, suggesting no material shift in expected profitability levels.
- The future P/E multiple has increased marginally from about 857.6x to 858.5x, reflecting a negligible change in the valuation multiple applied to forward earnings.
Key Takeaways
- Strategic investments in AI and pre-IPO companies are poised to enhance earnings and boost investor confidence through potential value realization.
- Anticipated IPO successes in portfolio companies like CoreWeave and WHOOP are expected to significantly bolster revenue growth and increase capital distributions.
- The company's high concentration in a few major investments and reliance on uncertain IPO timelines pose significant financial risks to valuation and earnings stability.
Catalysts
About SuRo Capital- A venture capital, mezzanine, secondary(direct) and business development company specializing in growth capital, emerging growth, late stage and venture capital-backed private companies.
- SuRo Capital expects significant value from upcoming IPOs in its portfolio, including CoreWeave, Canva, WHOOP, and Liquid Death, which could boost revenue upon successful listings.
- CoreWeave's partnership with OpenAI and its substantial growth trajectory, including a significant contract and acquisition of Weights and Biases, are poised to elevate earnings.
- The investment in AI companies like OpenAI and VAST Data positions SuRo Capital to benefit from rapid growth and valuation increases, potentially enhancing net margins.
- The firm anticipates growth in other key portfolio companies like ServiceTitan, WHOOP, and Liquid Death, supporting long-term revenue increases and improving investor confidence.
- Strategic investments in notable pre-IPO companies provide opportunities for capital gains, which may lead to higher distributions, impacting earnings per share positively.
SuRo Capital Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming SuRo Capital's revenue will grow by 2.6% annually over the next 3 years.
- Analysts are not forecasting that SuRo Capital will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate SuRo Capital's profit margin will increase from -815.8% to the average US Capital Markets industry of 25.6% in 3 years.
- If SuRo Capital's profit margin were to converge on the industry average, you could expect earnings to reach $1.3 million (and earnings per share of $0.05) by about May 2028, up from $-38.1 million today. The analysts are largely in agreement about this estimate.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 188.7x on those 2028 earnings, up from -2.9x today. This future PE is greater than the current PE for the US Capital Markets industry at 24.5x.
- Analysts expect the number of shares outstanding to grow by 0.85% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 8.65%, as per the Simply Wall St company report.
SuRo Capital Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- The decline in NAV by 16% in 2024 raises concerns about future valuation of portfolio assets, which can impact financial metrics such as net asset value and possibly affect investor sentiment.
- Market volatility creates uncertainty about IPO timelines and valuations, which might impact potential revenue from monetizing these investments.
- Several significant investments depend heavily on AI infrastructure, which may not grow as anticipated due to rapidly changing technology landscapes, potentially affecting future earnings.
- The sizable investment and reliance on CoreWeave’s IPO may pose a financial risk if the IPO does not achieve anticipated valuation, affecting net margins negatively.
- The high concentration of investments in a few companies (top five make up 44% of the portfolio) could lead to increased portfolio risk if any of these companies underperform or face market challenges, which would impact portfolio valuation and earnings reliability.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $7.925 for SuRo Capital based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $8.7, and the most bearish reporting a price target of just $7.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $5.0 million, earnings will come to $1.3 million, and it would be trading on a PE ratio of 188.7x, assuming you use a discount rate of 8.6%.
- Given the current share price of $4.67, the analyst price target of $7.92 is 41.1% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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