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Morgan Stanley Direct Lending Fund
(NYSE:MSDL)
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Rating:70Outperform
Price Target:
$17.00
▲(10.82% Upside)
Action:Reiterated
Date:08/07/26
Overall score reflects solid fundamentals led by strong cash generation and profitability, but moderated by volatility in earnings/margins and reduced balance-sheet clarity. The earnings call was balanced: dividend support, JV growth, and proactive refinancing/buybacks were positive, while higher non-accruals, NAV/NII pressure, and credit marks weighed on outlook. Valuation is supportive (reasonable P/E and high yield), while technicals are only mildly constructive given mixed momentum signals.
Positive Factors
Cash generation
Sustained, high free cash flow provides durable flexibility for dividend coverage, share repurchases, JV funding and debt servicing. Reliable cash conversion (FCF≈net income) supports capital return policies and reinvestment in origination capacity, strengthening long-term financial resilience.
Negative Factors
Rising non‑accruals
An uptick in non‑accruals signals episodic credit deterioration that can depress NII and require prolonged workout efforts. If restructurings fail to recover principal, credit losses can erode NAV, limit distributable income, and force more conservative origination or higher provisions over ensuing quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
Cash generation
Sustained, high free cash flow provides durable flexibility for dividend coverage, share repurchases, JV funding and debt servicing. Reliable cash conversion (FCF≈net income) supports capital return policies and reinvestment in origination capacity, strengthening long-term financial resilience.
Read all positive factors
Morgan Stanley Direct Lending Fund (MSDL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.30B
Dividend Yield12.31%
Average Volume (3M)487.00K
Price to Earnings (P/E)22.3
Beta (1Y)0.56
Revenue Growth-14.75%
EPS Growth-64.13%
CountryUS
EmployeesN/A
SectorFinancial
Sector Strength70
IndustryFinancial - Conglomerates
Share Statistics
EPS (TTM)0.69
Shares Outstanding84,105,125
10 Day Avg. Volume380,848
30 Day Avg. Volume487,005
Financial Highlights & Ratios
PEG Ratio-0.28
Price to Book (P/B)0.82
Price to Sales (P/S)3.72
P/FCF Ratio9.53
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$15.56Price Target Upside1.45% Upside
Rating ConsensusHold
Number of Analyst Covering4
EPS Forecast (FY)1.84
Revenue Forecast (FY)$359.33M
Morgan Stanley Direct Lending Fund Business Overview & Revenue Model
Company Description
Morgan Stanley Direct Lending Fund functions as a business development company (BDC) specializing in finance, primarily providing capital to mid-sized enterprises. Its investment strategy focuses on directly originating and funding senior secured ...
How the Company Makes Money
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Morgan Stanley Direct Lending Fund Earnings Call Summary
Earnings Call Date:Aug 06, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 05, 2026
Earnings Call Sentiment Neutral
The call conveyed a portfolio and business that remain fundamentally well-positioned and actively managed: management emphasized diversified first-lien exposure, strong JV growth, proactive liability management, ongoing repurchases, and selective origination. Offsetting these positives were near-term earnings and NAV pressure driven by a small number of underperforming credits (leading to $30.2M of mark-to-market/realized losses), an increase in non-accruals to 2.9%, a modest decline in NII per share (-4.3%), and net repayments exceeding new fundings for the quarter. Given the balance of constructive strategic actions and continued portfolio diversification against tangible near-term credit and income headwinds, the overall tone is balanced.Positive Updates
Dividend Coverage and Stability
Declared dividend of $0.45 per share for Q3, unchanged from prior quarter; Q2 net investment income (NII) of $0.45 per share covered the dividend and board remains comfortable with the $0.45 level.
Negative Updates
Decline in Net Investment Income per Share
NII per share fell to $0.45 from $0.47 in the prior quarter, a decline of approximately 4.3%, driven by income drag from new non‑accruals, higher financing costs, and a smaller incentive fee cap benefit.
Read all updates
Q2-2026 Updates
Positive
Negative
Dividend Coverage and Stability
Declared dividend of $0.45 per share for Q3, unchanged from prior quarter; Q2 net investment income (NII) of $0.45 per share covered the dividend and board remains comfortable with the $0.45 level.
Read all positive updates
Company Guidance
Management reiterated support for the $0.45 per‑share quarterly dividend (Q2 NII $0.45/sh vs. $0.47 prior quarter; spillover income ~ $0.86/sh) and expects that level to be sustainable as the Capstone JV ramps; the portfolio stood at ~$3.6B fair value (229 companies, avg borrower exposure ~$15.5M, median EBITDA ~$90M), ~93% first‑lien, weighted‑avg LTV ~39%, with roughly 95% of assets performing in line with original underwriting and non‑accruals at 2.9% of the portfolio at cost. Q2 activity included ~$146M of new fundings and ~$240M of repayments, 11 first‑lien deals totaling $85M closed (weighted‑avg spread on closed deals ~SOFR+500bps), H1 new platform activity was >75% LBOs/add‑ons, and PIK remained at a mid‑single‑digit % of the book. Capital metrics: NAV $19.50 (vs. $19.81), total assets ~$3.7B, net assets $1.65B, gross debt/equity 1.21x (56% of funded debt unsecured), repurchases of ~$12.5M this quarter (buybacks added $0.05 to NAV this quarter, $0.10 YTD), and a post‑quarter $350M five‑year unsecured note at 6.10% to prefund a $425M Feb‑2027 maturity; the JV has up to $250M equity capacity (MSDL committed $200M, ~52% called to support ~$426M of investments across 58 companies), which management expects to ramp and accrete NII over the coming year while remaining disciplined on leverage and credit.Morgan Stanley Direct Lending Fund Financial Statement Overview
Summary
Income Statement
72
Positive
Balance Sheet
60
Neutral
Cash Flow
78
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 307.23M | 386.99M | 332.52M | 328.13M | 100.22M | 98.62M |
| Gross Profit | 225.34M | 313.57M | 209.59M | 215.25M | 33.03M | 77.61M |
| EBITDA | 156.18M | 258.23M | 218.00M | 232.53M | 48.88M | 83.33M |
| Net Income | 90.78M | 122.09M | 215.56M | 231.01M | 48.54M | 83.25M |
Balance Sheet | ||||||
| Total Assets | 3.71B | 3.92B | 3.91B | 3.31B | 2.99B | 2.49B |
| Cash, Cash Equivalents and Short-Term Investments | 65.82M | 81.43M | 70.37M | 69.70M | 81.22M | 74.15M |
| Total Debt | 1.98B | 2.09B | 1.97B | 1.50B | 1.52B | 1.25B |
| Total Liabilities | 2.06B | 2.17B | 2.07B | 1.59B | 1.59B | 1.30B |
| Stockholders Equity | 1.65B | 1.75B | 1.84B | 1.72B | 1.40B | 1.19B |
Cash Flow | ||||||
| Free Cash Flow | 282.91M | 150.90M | 201.47M | 185.78M | 121.59M | 67.69M |
| Operating Cash Flow | 282.91M | 150.90M | 201.47M | 185.78M | 121.59M | 67.69M |
| Investing Cash Flow | 43.00K | 0.00 | -575.01M | -269.60M | -551.43M | -1.73B |
| Financing Cash Flow | -269.25M | -132.90M | 376.19M | 72.31M | 436.90M | 1.72B |
Morgan Stanley Direct Lending Fund Technical Analysis
Positive
15.34
Price Trends
15.10
Positive
14.75
Positive
14.95
Positive
Market Momentum
0.01
Negative
55.61
Neutral
73.88
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MSDL, the sentiment is Positive. The current price of 15.34 is above the 20-day moving average (MA) of 15.25, above the 50-day MA of 15.10, and above the 200-day MA of 14.95, indicating a bullish trend. The MACD of 0.01 indicates Negative momentum. The RSI at 55.61 is Neutral, neither overbought nor oversold. The STOCH value of 73.88 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MSDL.
Morgan Stanley Direct Lending Fund Risk Analysis
Morgan Stanley Direct Lending Fund disclosed 96 risk factors in its most recent earnings report. Morgan Stanley Direct Lending Fund reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Morgan Stanley Direct Lending Fund Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $633.14M | 14.57 | 4.99% | 14.73% | -11.34% | -48.35% | |
70 Outperform | $1.30B | 22.33 | 5.29% | 12.39% | -14.75% | -64.13% | |
70 Outperform | $7.67B | 28.49 | 27.15% | ― | 15.15% | 101.51% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
57 Neutral | $320.31M | -10.56 | 9.94% | 16.93% | -14.85% | -275.66% | |
57 Neutral | $393.75M | -66.64 | 4.10% | ― | 11.49% | -57.82% |
* Financial Sector Average
MSDL
Morgan Stanley Direct Lending Fund
15.43
-0.24
-1.52%
PSBD
Palmer Square Capital BDC Inc.
10.45
-1.60
-13.31%
NCDL
Nuveen Churchill Direct Lending Corp.
12.82
-1.32
-9.32%
AUNA
Auna S.A. Class A
5.32
-0.93
-14.88%
PACS
PACS Group Inc
48.44
37.08
326.41%
GPAT
GP-Act III Acquisition Corporation Class A
11.16
0.62
5.88%
Morgan Stanley Direct Lending Fund Corporate Events
Business Operations and StrategyDividendsFinancial Disclosures
Morgan Stanley Direct Lending Fund Posts Q2 2026 Results
Neutral
Aug 6, 2026
Morgan Stanley Direct Lending Fund reported second-quarter 2026 results on August 6, 2026, posting net investment income of $38.2 million, or $0.45 per share, down slightly from the prior quarter, and a net asset value of $19.50 per share. The por...
Business Operations and StrategyPrivate Placements and Financing
Morgan Stanley Direct Lending Fund Issues New Unsecured Notes
Positive
Jul 9, 2026
On July 9, 2026, Morgan Stanley Direct Lending Fund issued $350 million of 6.100% unsecured notes due July 15, 2031 under a supplemental indenture with U.S. Bank Trust Company, National Association, with interest payable semi-annually starting Jan...
Business Operations and StrategyFinancial Disclosures
Morgan Stanley Direct Lending Fund Plans Q2 Results
Neutral
Jul 6, 2026
On July 6, 2026, Morgan Stanley Direct Lending Fund announced plans to release financial results for the second quarter ended June 30, 2026, after the market close on August 6, 2026. The business development company will follow the earnings public...
Business Operations and StrategyPrivate Placements and Financing
Morgan Stanley Direct Lending Issues New 2031 Notes
Positive
Jul 1, 2026
On June 29, 2026, Morgan Stanley Direct Lending Fund entered into an underwriting agreement with MS Capital Partners Adviser Inc. and a syndicate of investment banks to issue and sell $350 million of 6.100% notes due 2031. The deal, conducted unde...
Executive/Board ChangesShareholder Meetings
Morgan Stanley Direct Lending Fund Shareholders Back Board, Auditor
Positive
Jun 2, 2026
On June 1, 2026, Morgan Stanley Direct Lending Fund held its 2026 annual meeting of stockholders, with 51,663,943 of 85,261,312 eligible shares represented, establishing a quorum and underscoring solid shareholder engagement. Stockholders elected ...
Executive/Board Changes
Morgan Stanley Direct Lending Fund Announces Officer Resignation
Neutral
May 29, 2026
On May 26, 2026, Morgan Stanley Direct Lending Fund announced that Jonathan Frohlinger resigned as the company’s Principal Accounting Officer, effective the same day. The company stated that his departure did not arise from any disagreement ...
Business Operations and StrategyDividendsFinancial DisclosuresPrivate Placements and Financing
Morgan Stanley Direct Lending Declares Quarterly Cash Distribution
Neutral
May 7, 2026
Morgan Stanley Direct Lending Fund, a New York–listed business development company focused on middle-market direct lending, reported first-quarter 2026 results showing net investment income of $40.5 million, or $0.47 per share, down slightly...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.