Morgan Stanley Direct Lending Fund (MSDL)
NYSE:MSDL
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Morgan Stanley Direct Lending Fund
(NYSE:MSDL)
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Rating:74Outperform
Price Target:
$17.50
▲(13.93% Upside)
Action:Reiterated
Date:05/09/26
The score is driven primarily by solid financial performance (strong margins and cash conversion) and very attractive valuation (low P/E and high yield). Technicals are supportive with positive momentum and price above key shorter-term averages, while the earnings call introduces moderate risk from the distribution reduction and near-term NII pressure alongside modest credit/NAV softness; the extended credit facility is an added positive for funding stability.
Positive Factors
High cash generation and margins
Consistently strong margins and one-to-one free cash flow to net income signal durable earnings quality and cash conversion. Reliable cash generation supports distributions, buybacks and JV commitments, and provides buffer through credit cycles for a direct‑lending fund.
Negative Factors
Distribution reduction
A 10% distribution cut reflects management recalibrating payouts amid lower rates and indicates income generation cannot fully fund prior cash yields. Over the medium term this reduces investor income dependability and may constrain fundraising and investor confidence.
Read all positive and negative factors
Positive Factors
Negative Factors
High cash generation and margins
Consistently strong margins and one-to-one free cash flow to net income signal durable earnings quality and cash conversion. Reliable cash generation supports distributions, buybacks and JV commitments, and provides buffer through credit cycles for a direct‑lending fund.
Read all positive factors
Morgan Stanley Direct Lending Fund (MSDL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.28B
Dividend Yield12.6%
Average Volume (3M)706.30K
Price to Earnings (P/E)―
Beta (1Y)0.59
Revenue Growth-11.06%
EPS Growth-53.49%
CountryUS
EmployeesN/A
SectorFinancial
Sector Strength70
IndustryFinancial - Conglomerates
Share Statistics
EPS (TTM)1.01
Shares Outstanding84,764,710
10 Day Avg. Volume639,071
30 Day Avg. Volume706,298
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 Cap2.53
Enterprise Value/Revenue10.80
Enterprise Value/Gross Profit16.27
Enterprise Value/Ebitda21.21
Forecast
1Y Price Target
$15.25Price Target Upside-0.72% Downside
Rating ConsensusHold
Number of Analyst Covering5
EPS Forecast (FY)1.83
Revenue Forecast (FY)$361.58M
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 s...
How the Company Makes Money
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Morgan Stanley Direct Lending Fund Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Aug 06, 2026
Earnings Call Sentiment Positive
The call highlighted strong execution on capital management and origination (CLO, JV, refinancings, repurchase program), a large and defensively structured first‑lien portfolio, and stable spreads driven by disciplined underwriting. Offsetting these positives were near-term headwinds from lower base rates (yield down ~40 bps), a modest decline in NII ($0.49 vs $0.50 prior quarter), a 10% distribution reduction to $0.45, small realized/unrealized losses ($13.7M) and a modest uptick in nonaccruals concentrated in a few sectors. Management emphasized confidence in portfolio quality and gradual accretion from the JV, while acknowledging rate‑driven earnings pressure that will be monitored.Positive Updates
Solid Operating Performance and Earnings Quality
Net investment income of $42.4M or $0.49 per share in Q4 2025 (vs. $0.50 in prior quarter). Earnings quality remained high with limited contribution from PIK and other non-cash income.
Negative Updates
Distribution Reduction
Board declared Q1 2026 distribution of $0.45 per share, a $0.05 (10%) reduction from the prior quarter's $0.50 distribution—adjusted to align with normalization of short-term interest rates.
Read all updates
Q4-2025 Updates
Positive
Negative
Solid Operating Performance and Earnings Quality
Net investment income of $42.4M or $0.49 per share in Q4 2025 (vs. $0.50 in prior quarter). Earnings quality remained high with limited contribution from PIK and other non-cash income.
Read all positive updates
Company Guidance
The company guided to a Q1 2026 regular distribution of $0.45 per share (a $0.05 reduction), implying roughly a 9% yield on NAV, and said the payout is intended to be durable though the Board may reassess over time (including a potential year‑end special if excess income exists); key metrics at quarter‑end included $3.8B portfolio at fair value, $3.9B total assets, $1.75B net assets, NAV $20.26 (down from $20.41), spillover ~$0.85, Q4 net investment income $42.4M ($0.49 per share), total investment income $96.6M, PIK income 3.9% of income (down 20 bps), expenses $54.2M, net unrealized/realized losses $13.7M, nonaccruals 160 bps, 227 portfolio companies across 35 industries, 96% first‑lien, weighted average LTV ~40%, median EBITDA $90M, weighted average yield on debt 9.3% at cost (9.5% at fair value, ~40 bps q/q decline), debt/equity 1.20x (unsecured 54% of funded debt), $146M new commitments in the quarter (17 new companies), $164M fundings vs $163M repayments, ~$9M repurchased in Q4 and a renewed $100M buyback program, weighted average spreads on new deployment mid‑ to high‑400 bps, and the newly launched JV (MSDL committed $200M of up to $250M equity, ~47% called) with $372.8M of commitments across 51 companies, a $500M credit facility and a target to scale to ~$700M of assets over ~4–6 quarters — the JV is nearly 50% ramped and expected to be accretive to NII over time; management also signaled spread stability, a deceleration in yield contraction and additional Fed easing as key drivers of near‑term NII dynamics.Morgan Stanley Direct Lending Fund Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
67
Positive
Cash Flow
72
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 299.71M | 386.99M | 332.52M | 328.13M | 100.22M | 98.62M |
| Gross Profit | 198.87M | 313.57M | 209.59M | 215.25M | 33.03M | 77.61M |
| EBITDA | 152.53M | 258.23M | 218.00M | 232.53M | 48.88M | 83.33M |
| Net Income | 87.91M | 122.09M | 215.56M | 231.01M | 48.54M | 83.25M |
Balance Sheet | ||||||
| Total Assets | 3.82B | 3.92B | 3.91B | 3.31B | 2.99B | 2.49B |
| Cash, Cash Equivalents and Short-Term Investments | 96.69M | 81.43M | 70.37M | 69.70M | 81.22M | 74.15M |
| Total Debt | 2.05B | 2.09B | 1.97B | 1.50B | 1.52B | 1.25B |
| Total Liabilities | 2.13B | 2.17B | 2.07B | 1.59B | 1.59B | 1.30B |
| Stockholders Equity | 1.69B | 1.75B | 1.84B | 1.72B | 1.40B | 1.19B |
Cash Flow | ||||||
| Free Cash Flow | 219.91M | 150.90M | 201.47M | 185.78M | 121.59M | 67.69M |
| Operating Cash Flow | 219.91M | 150.90M | 201.47M | 185.78M | 121.59M | 67.69M |
| Investing Cash Flow | 1.66M | 0.00 | -575.01M | -269.60M | -551.43M | -1.73B |
| Financing Cash Flow | -182.95M | -132.90M | 376.19M | 72.31M | 436.90M | 1.72B |
Morgan Stanley Direct Lending Fund Technical Analysis
Positive
15.36
Price Trends
14.77
Positive
15.02
Positive
15.49
Negative
Market Momentum
0.03
Positive
49.86
Neutral
47.90
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 15.36 is above the 20-day moving average (MA) of 15.27, above the 50-day MA of 14.77, and below the 200-day MA of 15.49, indicating a neutral trend. The MACD of 0.03 indicates Positive momentum. The RSI at 49.86 is Neutral, neither overbought nor oversold. The STOCH value of 47.90 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 |
|---|---|---|---|---|---|---|---|
74 Outperform | $1.28B | -66.38 | 5.02% | 12.60% | -11.06% | -53.49% | |
69 Neutral | $636.11M | 18.08 | 6.76% | 14.71% | -12.61% | -36.66% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
66 Neutral | $5.97B | 15.63 | 26.63% | ― | 20.90% | 243.93% | |
57 Neutral | $319.00M | 53.48 | 4.10% | ― | 5.41% | -6.40% | |
55 Neutral | $336.73M | ― | -0.03% | 14.10% | -14.06% | -306.26% |
* Financial Sector Average
MSDL
Morgan Stanley Direct Lending Fund
15.09
-2.20
-12.73%
PSBD
Palmer Square Capital BDC Inc.
10.82
-1.38
-11.30%
NCDL
Nuveen Churchill Direct Lending Corp.
12.88
-0.94
-6.79%
AUNA
Auna S.A. Class A
4.31
-2.23
-34.10%
PACS
PACS Group Inc
37.75
27.53
269.37%
GPAT
GP-Act III Acquisition Corporation Class A
10.83
0.35
3.34%
Morgan Stanley Direct Lending Fund Corporate Events
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...
Business Operations and StrategyPrivate Placements and Financing
Morgan Stanley Direct Lending Extends Key Revolving Credit Facility
Positive
Apr 27, 2026
Morgan Stanley Direct Lending Fund, a direct lender to middle-market borrowers, has amended its senior secured revolving credit facility with Truist Bank and a syndicate of lenders, refining the terms of a key funding source for its lending activi...
Financial Disclosures
Morgan Stanley Direct Lending Sets Q1 2026 Results Call
Neutral
Apr 6, 2026
On April 6, 2026, Morgan Stanley Direct Lending Fund announced plans to release its financial results for the first quarter ended March 31, 2026, after markets close on May 7, 2026. The business development company will follow with an earnings con...
Business Operations and StrategyDividendsFinancial Disclosures
Morgan Stanley Direct Lending Posts Q4 Results, Declares Dividend
Neutral
Feb 26, 2026
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 ass...
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.