Burford Capital's (BUR) Q1 results were largely driven by a massive $2.4 billion non-cash YPF write-down after the Second Circuit's reversal of the $16.1 billion judgment against Argentina, Wedbush Securities said Monday in a note.

Despite adjusting for multiple factors affected by the YPF reversal, the firm still calculates an operating loss for Q1 given the unrealized losses for the rest of the portfolio tied to fair value marks, according to the note.

Capital allocation priorities moving forward include continuing to fund ongoing commitments and underwrite new business, strategically lowering debt through open market purchases and calling existing maturities, potentially redirecting the $27 million annual dividend toward debt reduction, and aggressively managing operating expenses, according to the note.

Burford noted that the chances of further relief in the YPF case from US courts are low, and that the more consequential path forward is international arbitration, the brokerage said.

Wedbush maintained a neutral rating on Burford Capital and raised the price target to $5 from $4.75.

Price: 4.86, Change: -0.28, Percent Change: -5.45