Analyst Derek Hewett from Bank of America Securities maintained a Buy rating on Ares Capital (ARCC – Research Report) and keeping the price target at $23.00.
Derek Hewett has given his Buy rating due to a combination of factors including Ares Capital’s stable financial performance and strategic positioning. Despite a slight miss in core EPS compared to forecasts, the company demonstrated strong credit quality, modest portfolio growth, and robust liquidity. The stability in yield pressure is expected to bolster top-line growth, and the company’s dividend coverage remains solid at 104%.
Furthermore, Ares Capital’s non-accruals have improved, and their portfolio continues to grow, with a fair value increase to $27 billion. The company’s net asset value per share remains mostly stable, and their leverage is within the targeted range, indicating prudent financial management. These factors, combined with a favorable economic backdrop, position Ares Capital well for gaining market share and achieving risk-adjusted returns, justifying the Buy rating.
In another report released on April 28, Wells Fargo also maintained a Buy rating on the stock with a $22.00 price target.