SWK Holdings (SWKH) AI Stock Analysis

• Market Cap: $207.20M
• Dividend Yield: N/A
• Average Volume (3M): 7.93K
• Price to Earnings (P/E): 14.4
• Beta (1Y): 0.24
• Revenue Growth: 23.75%
• EPS Growth: -5.64%
• Country: US
• Employees: 24
• Sector: Financial
• Sector Strength: 80
• Industry: Asset Management
• EPS (TTM): 1.18
• Shares Outstanding: 12,252,816
• 10 Day Avg. Volume: 6,454
• 30 Day Avg. Volume: 7,932
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 8.17
• Price to Cash Flow (P/CF): 8.40
• P/FCF Ratio: 8.20
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $21.00
• Price Target Upside: 24.19% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

SWK Holdings scores well with solid financial performance, positive technical indicators, and optimistic earnings call sentiment. The company's robust cash flow, low leverage, and strategic financial maneuvers enhance its stability. While the P/E ratio is reasonable, the absence of a dividend yield could deter income investors. Nonetheless, the overall outlook remains positive, driven by strong fundamentals and strategic growth initiatives.

Positive Factors

Analyst Rating

The analyst reiterates a Buy rating, expecting stock price appreciation of about 22% to the $21 price target.

Credit Quality Improvement

SWKH resolved its three most troublesome non-accrual loans, freeing up capital to be invested in earning assets, and credit quality is regarded as stable.

Negative Factors

Earnings Performance

SWKH's 3Q24 results missed estimates due to a 3.6% reduction in earning assets and a 171 basis point narrowing of the net interest margin to 12.59%.

Investment Portfolio Reduction

Management has made substantial portfolio moves to improve credit quality in its loan portfolio and monetize its royalties portfolio, which should decrease the size of the investment portfolio by about 17%, thus lowering earnings power in the near term.

SWK Holdings Business Overview & Revenue Model

Company Description

SWK Holdings Corporation, a specialty finance company that focuses on the healthcare sector. It operates in two segments, Finance Receivables and Pharmaceutical Development. The company provides customized financing solutions to a range of life science companies, including companies in the biotechnology, medical device, medical diagnostics and related tools, animal health, and pharmaceutical industries, as well as institutions and inventors. It also offers non-discretionary investment advisory services to institutional clients in separately managed accounts to invest in life science finance. In addition, the company engages in the pharmaceutical development, formulation and manufacturing, and licensing business through the Peptelligence platform. Further, it intends to out-license its internal product pipeline to create novel formulations using its proprietary technology to develop treatments for patients and caregivers. The company was formerly known as Kana Software, Inc. and changed its name to SWK Holdings Corporation in December 2009. SWK Holdings Corporation was founded in 1996 and is headquartered in Dallas, Texas.

How the Company Makes Money

SWK Holdings makes money through its core business of providing financing solutions to healthcare companies. The company earns revenue primarily from interest income on its debt investments and potential equity gains from its equity investments. By offering tailored financing options, SWK Holdings can charge interest and fees on the loans it provides, thereby generating a steady income stream. Additionally, any appreciation in the value of its equity investments contributes to the company's earnings. The company's focus on the healthcare sector allows it to leverage its expertise and relationships in this field, which can lead to more lucrative investment opportunities and partnerships.

SWK Holdings Financial Statement Overview

Summary

SWK Holdings exhibits solid financial health with strong cash flow and low leverage. The company demonstrates impressive revenue growth and profitability, though there's a slight decrease in net profit margins and return on equity. The strong cash position and conservative balance sheet enhance its financial stability.

Income Statement

SWK Holdings shows solid profitability with a stable Gross Profit Margin and strong Net Profit Margin over the years. The Gross Profit Margin for 2024 was 100%, as the revenue equals gross profit, indicating no cost of goods sold, typical in asset management. The Net Profit Margin decreased slightly from 42.08% in 2023 to 29.97% in 2024, reflecting a reduction in net income. The Revenue Growth Rate from 2023 to 2024 was 19.12%, showing positive growth but slower than in previous years. Despite these strengths, the decline in EBIT Margin and EBITDA Margin from 2023 to 2024 indicates profitability pressure.

Balance Sheet

The company's balance sheet is robust with a low Debt-to-Equity Ratio of 0.11 in 2024, reflecting conservative leverage. The Return on Equity (ROE) was 4.67% in 2024, down from 5.67% in 2023, indicating a slight decrease in efficiency in generating returns for shareholders. The Equity Ratio remained strong at 86.85% in 2024, providing a buffer against liabilities. Overall, SWK Holdings maintains a strong equity base with minimal reliance on debt, though the slight decrease in ROE could be monitored.

Cash Flow

SWK Holdings has demonstrated strong cash flow management with a healthy Free Cash Flow to Net Income Ratio of 1.70 in 2024, indicating efficient conversion of earnings to cash. The Operating Cash Flow to Net Income Ratio was 1.71, supporting strong cash generation from operations. The Free Cash Flow Growth Rate was 59.26% from 2023 to 2024, showcasing significant improvement in cash generation. These metrics indicate strong liquidity and financial flexibility.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
44.99M	37.76M	41.48M	56.16M	36.71M
	Gross Profit
42.78M	34.32M	34.53M	48.81M	32.44M
	EBIT
11.59M	14.65M	15.48M	31.13M	9.81M
	EBITDA
24.46M	20.66M	12.43M	37.45M	21.90M
	Net Income Common Stockholders
13.49M	15.89M	13.49M	25.93M	5.20M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
5.93M	4.50M	6.16M	43.90M	4.22M
	Total Assets
332.24M	334.25M	299.62M	282.67M	273.90M
	Total Debt
31.41M	43.13M	2.44M	8.00K	11.76M
	Net Debt
25.48M	38.63M	-3.71M	-42.85M	8.75M
	Total Liabilities
43.55M	53.94M	19.69M	15.43M	33.39M
	Stockholders Equity
288.69M	280.31M	279.93M	267.24M	240.51M
Cash Flow		Free Cash Flow
22.91M	14.39M	7.91M	33.22M	15.33M
	Operating Cash Flow
23.05M	14.89M	8.20M	34.30M	19.27M
	Investing Cash Flow
-10.13M	-48.95M	-43.55M	25.76M	-35.17M
	Financing Cash Flow
-12.22M	33.14M	-1.36M	-20.20M	7.75M

SWK Holdings Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 16.91
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SWKH, the sentiment is Positive. The current price of 16.91 is above the 20-day moving average (MA) of 16.84, above the 50-day MA of 16.77, and above the 200-day MA of 16.72, indicating a bullish trend. The MACD of 0.22 indicates Negative momentum. The RSI at 57.92 is Neutral, neither overbought nor oversold. The STOCH value of 73.77 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SWKH.

SWK Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SWKH	81 Outperform	$207.20M	14.39	5.13%	―	23.75%	-5.64%
GSBD	72 Outperform	$1.24B	19.32	3.96%	15.77%	-28.04%	-69.52%
HTGC	67 Neutral	$2.98B	10.68	13.71%	9.31%	-1.49%	-29.48%
Sector *	63 Neutral	$12.86B	9.19	9.16%	4.78%	16.31%	-8.97%
TPVG	60 Neutral	$245.64M	7.47	9.26%	21.24%	22.53%	―
TCPC	58 Neutral	$602.35M	―	-8.57%	17.94%	8.24%	-207.60%
PNNT	52 Neutral	$420.51M	25.79	3.28%	14.60%	―	-66.59%

SWK Holdings Corporate Events

SWK Holdings Announces Royalty Portfolio Monetization

On March 19, 2025, SWK Holdings Corporation announced the monetization of its royalty portfolio through two transactions. ANI Pharmaceuticals exercised its buyout option on March 17, 2025, resulting in a $17.3 million payment to SWK. Additionally, SWK entered into an agreement with Soleus Capital to sell its remaining performing royalty portfolio for $34.0 million. The combined transactions total approximately $51.3 million, exceeding the portfolio’s book value by $1.0 million. SWK plans to use part of the proceeds for a cash dividend to shareholders, with details to be announced upon closing. This move underscores SWK’s strategy to realize asset value and potentially benefit stakeholders.

SWK Holdings Highlights Financial Strategies in Investor Presentation

On March 20, 2025, SWK Holdings released an investor presentation highlighting its financial strategies and performance metrics, including the use of Non-GAAP Financial Measures for a comprehensive view of its operations. The presentation emphasized SWK’s focus on shareholder value creation, with a strategy to increase book value per share and generate current income. In March 2025, SWK monetized its performing royalty for $51.3 million and plans to announce a dividend upon closing, reflecting its commitment to enhancing shareholder returns.