Morgan Stanley Direct Lending Fund (MSDL) AI Stock Analysis

• Market Cap: $1.34B
• Dividend Yield: 12.6%
• Average Volume (3M): 753.93K
• Price to Earnings (P/E): 9.3
• Beta (1Y): 0.52
• Revenue Growth: 1.97%
• EPS Growth: -35.20%
• Country: US
• Employees: N/A
• Sector: Financial
• Sector Strength: 70
• Industry: Financial - Conglomerates
• EPS (TTM): 0.49
• Shares Outstanding: 86,811,200
• 10 Day Avg. Volume: 717,869
• 30 Day Avg. Volume: 753,929
• PEG Ratio: -0.19
• Price to Book (P/B): 0.82
• Price to Sales (P/S): 3.62
• P/FCF Ratio: 9.53
• Enterprise Value/Market Cap: 0.90
• Enterprise Value/Revenue: 4.01
• Enterprise Value/Gross Profit: 11.99
• Enterprise Value/Ebitda: 12.72
• 1Y Price Target: $17.00
• Price Target Upside: 9.89% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 2
• EPS Forecast (FY): 1.85
• Revenue Forecast (FY): $368.61M

• Rating: 72 Outperform
• Price Target: $17.00 ▲(9.89% Upside)
• Action: Reiterated Date: 02/27/26
• Date: Action: Reiterated 02/27/26

The score is driven primarily by solid underlying financial performance (profitability and positive cash flow) and an attractive valuation (low P/E and high yield). These positives are partially offset by weaker technicals (below key moving averages, negative MACD) and earnings-call risks, including the distribution cut and near-term NII/NAV pressure tied to rate dynamics and some credit stress.

Positive Factors

Cash Generation

The fund has shown consistently positive operating cash flow and free cash flow that track net income closely, indicating durable cash conversion. Strong historical coverage (operating cash flow often > net income) supports sustainable distributions, buybacks and JV funding, bolstering long-term financial flexibility despite some 2025 variability.

Defensive Portfolio Structure

A portfolio concentrated in first‑lien loans with broad issuer diversification and a healthy median EBITDA supports lower loss severity and credit resilience. The low LTV and mix across 35 industries reduce single-sector concentration risk, underpinning more stable long‑term income and recovery prospects through credit cycles.

Capital & Growth Initiatives (JV/CLO/Repurchases)

Strategic funding actions — a CLO, a nearly‑ramped JV (MSDL committed $200M) and an active repurchase program — expand origination capacity, diversify funding sources and create avenues for accretive NII. These initiatives strengthen scalable growth and shareholder returns over multiple quarters as the JV and CLO mature.

Negative Factors

Distribution Cut & NII Pressure

A 10% distribution reduction signals pressure on payout sustainability from lower base rates and falling yields. Persistent NII headwinds from Fed easing can compress net investment income and NAV support, forcing ongoing distribution adjustments or reduced retained capital for reinvestment over the medium term.

Reporting & Data Quality Inconsistencies

Inconsistent 2025 disclosures — missing operating fields and abrupt leverage reporting changes — undermine trend visibility and complicate credit and cash‑flow underwriting. Reduced transparency raises the risk of misjudging leverage and earnings quality, making medium‑term credit assessment and capital planning less reliable.

Leverage & Funding Mix Risk

Elevated leverage and a high share of unsecured funding increase refinancing and credit exposure if market conditions tighten. Unsecured debt raises funding cost and priority risk relative to secured loans, potentially amplifying NAV volatility and downside in stressed scenarios over the next several quarters.

Morgan Stanley Direct Lending Fund Business Overview & Revenue Model

Company Description

Morgan Stanley Direct Lending Fund is a business development and finance company, which engages in lending to middle-market companies. It invests in directly originated senior secured term loans including first lien senior secured term loans and second lien senior secured term loans. The company was founded on May 30, 2019 and is headquartered in New York, NY.

How the Company Makes Money

The Morgan Stanley Direct Lending Fund generates revenue primarily through interest income from loans it extends to middle-market companies. The fund charges interest on the principal amount of the loans, which constitutes the main revenue stream. Additionally, MSDL may earn fees for structuring and arranging financing, as well as management fees based on assets under management. The fund's performance can also benefit from capital appreciation if the companies it lends to grow and succeed, potentially leading to higher loan recoveries in case of repayment. Partnerships with financial institutions and advisory firms can enhance deal flow and investment opportunities, further contributing to the fund's earnings.

Morgan Stanley Direct Lending Fund Financial Statement Overview

Summary

Strong revenue growth and consistently high reported net margins support solid fundamentals, and cash flow has been positive with good cash conversion in most years. Offsetting this, multiple 2025 reporting inconsistencies (missing operating line items, leverage presentation shifts, and a noisy cash coverage ratio) reduce confidence in trend quality and balance-sheet underwriting.

Income Statement

Revenue expanded sharply in 2025 (up ~38%), showing strong top-line momentum. Profitability is a key strength: net margins have been very high across years (roughly ~45%–84%), indicating strong earnings power for the business model. The main weakness is some inconsistency in reported operating profitability detail—2025 shows net income but zero gross/operating profit fields, which reduces transparency and makes year-to-year operating margin comparisons less reliable.

Balance Sheet

The balance sheet shows a sizable equity base (~$1.75B in 2025) and assets around ~$3.9B, supporting scale. Returns on equity have been solid overall (about ~10%–13% in 2023–2025 versus lower in earlier years), suggesting improving profitability on the capital base. The key risk is leverage volatility: debt-to-equity was around ~0.87–1.09 during 2022–2024, but 2025 reports zero total debt (a sharp change that may reflect reporting/classification differences), making leverage trends less consistent and harder to underwrite.

Cash Flow

Cash generation looks healthy: operating cash flow and free cash flow are positive each year, and free cash flow tracks net income closely (free cash flow to net income reported at 1.0). Operating cash flow generally covered net income well in 2021–2024 (roughly ~2.1x–2.7x), signaling good cash conversion. The main weakness is variability: operating cash flow declined in 2025 versus 2024, and the 2025 operating cash flow coverage ratio is shown as 0.0 despite positive operating cash flow, which introduces data-quality noise when assessing sustainability.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	397.29M	332.52M	328.13M	100.22M	98.62M
Gross Profit	0.00	209.59M	215.25M	33.03M	77.61M
EBITDA	0.00	218.00M	232.53M	48.88M	83.33M
Net Income	178.84M	215.56M	231.01M	48.54M	83.25M
Balance Sheet
Total Assets	3.92B	3.91B	3.31B	2.99B	2.49B
Cash, Cash Equivalents and Short-Term Investments	81.43M	70.37M	69.70M	81.22M	74.15M
Total Debt	0.00	1.97B	1.50B	1.52B	1.25B
Total Liabilities	2.17B	2.07B	1.59B	1.59B	1.30B
Stockholders Equity	1.75B	1.84B	1.72B	1.40B	1.19B
Cash Flow
Free Cash Flow	150.90M	201.47M	185.78M	121.59M	67.69M
Operating Cash Flow	150.90M	201.47M	185.78M	121.59M	67.69M
Investing Cash Flow	301.00K	-575.01M	-269.60M	-551.43M	-1.73B
Financing Cash Flow	-132.90M	376.19M	72.31M	436.90M	1.72B

Morgan Stanley Direct Lending Fund Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 15.47
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MSDL, the sentiment is Negative. The current price of 15.47 is below the 20-day moving average (MA) of 15.62, below the 50-day MA of 16.25, and below the 200-day MA of 17.25, indicating a bearish trend. The MACD of -0.21 indicates Negative momentum. The RSI at 42.83 is Neutral, neither overbought nor oversold. The STOCH value of 34.34 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MSDL.

Morgan Stanley Direct Lending Fund Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MSDL	72 Outperform	$1.34B	9.32	8.00%	12.60%	1.97%	-35.20%
PACS	70 Outperform	$6.21B	37.91	22.08%	―	35.37%	-37.58%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
NCDL	66 Neutral	$654.38M	8.63	8.46%	14.71%	-8.32%	-33.94%
AUNA	58 Neutral	$380.43M	7.30	11.61%	―	2.14%	―
PSBD	52 Neutral	$343.75M	25.14	2.72%	14.10%	-2.38%	-75.49%

Morgan Stanley Direct Lending Fund Corporate Events

Morgan Stanley Direct Lending Posts Q4 Results, Declares Dividend

On February 26, 2026, Morgan Stanley Direct Lending Fund reported fourth-quarter and full-year 2025 results, posting net investment income of $42.4 million, or $0.49 per share, slightly below the prior quarter’s $0.50 per share, with net asset value edging down to $20.26 and debt-to-equity rising to 1.20x. The board declared a first-quarter 2026 regular dividend of $0.45 per share and highlighted modest net deployment, a $3.8 billion predominantly first-lien debt portfolio, and the post-quarter launch of Capstone Lending LLC, a joint venture that expands its lending capacity alongside an institutional partner.

For the quarter ended December 31, 2025, total investment income slipped to $96.6 million from $99.7 million, mainly due to lower base rates, while net expenses declined on a reduced incentive fee, and the company recorded unrealized depreciation and realized losses totaling $13.7 million. The launch of the Capstone Lending joint venture, supported by capital commitments of up to $200 million from the company and $50 million from its partner with nearly half initially called in February 2026, underscores a strategic move to scale origination and maintain its position in the competitive direct lending market while continuing to return capital through regular dividends.

The most recent analyst rating on (MSDL) stock is a Hold with a $18.00 price target. To see the full list of analyst forecasts on Morgan Stanley Direct Lending Fund stock, see the MSDL Stock Forecast page.

Morgan Stanley Direct Lending Sets Q4 2025 Earnings Call

On January 26, 2026, Morgan Stanley Direct Lending Fund announced that it would release its financial results for the fourth quarter and full year ended December 31, 2025, after markets close on February 26, 2026, and hold an earnings conference call with a question-and-answer session on February 27, 2026, at 10:00 a.m. Eastern Time. The scheduled earnings release and call signal an upcoming detailed update on the fund’s performance and portfolio activity, providing investors and analysts with fresh insight into its lending operations in the middle-market space and any implications for its positioning within the specialty finance and business development company sector.

The most recent analyst rating on (MSDL) stock is a Hold with a $18.00 price target. To see the full list of analyst forecasts on Morgan Stanley Direct Lending Fund stock, see the MSDL Stock Forecast page.

Morgan Stanley Direct Lending Fund Names New Compliance Chief

On December 22, 2025, Morgan Stanley Direct Lending Fund announced that Chief Compliance Officer Gauranga Pal had resigned effective January 1, 2026, while remaining an Executive Director at Morgan Stanley Investment Management, with the company noting that his departure did not stem from any disagreement. The Board simultaneously appointed industry veteran Hope Brown as Chief Compliance Officer effective January 1, 2026, expanding her compliance leadership across several affiliated business development companies and leveraging her extensive background in investment company compliance, risk management, ESG compliance and oversight roles at Calvert Funds and other asset managers, underscoring Morgan Stanley’s emphasis on strengthening its governance and regulatory oversight framework across its private credit and investment platforms.

The most recent analyst rating on (MSDL) stock is a Hold with a $18.00 price target. To see the full list of analyst forecasts on Morgan Stanley Direct Lending Fund stock, see the MSDL Stock Forecast page.