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Morgan Stanley Direct Lending Fund (MSDL)
NYSE:MSDL
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Morgan Stanley Direct Lending Fund
(NYSE:MSDL)
Rating:80Outperform
Price Target:―
Positive Factors
Financial Performance
MSDL reported NOI of $0.66, ahead of the estimate and last quarter's performance, as leverage continues to ramp and repays build upon its top-line impact.
Market Position
MSDL was lead or co-lead on 90% of its deals during the quarter, which were concentrated in the 475 / 500 spread context.
Negative Factors
Credit Impact
Credit consumed approximately $0.06 of NAV, as a previously recognized loss on Matrix was realized.
Morgan Stanley Direct Lending Fund (MSDL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.67B
Dividend Yield10.46%
Average Volume (3M)369.52K
Price to Earnings (P/E)8.8
Beta (1Y)0.55
Revenue Growth8.41%
EPS Growth-22.34%
CountryUS
EmployeesN/A
SectorGeneral
Sector StrengthN/A
IndustryFinancial - Conglomerates
Share Statistics
EPS (TTM)0.52
Shares Outstanding87,146,280
10 Day Avg. Volume467,072
30 Day Avg. Volume369,523
Financial Highlights & Ratios
PEG Ratio-0.90
Price to Book (P/B)0.61
Price to Sales (P/S)0.00
P/FCF Ratio14.98
Enterprise Value/Market Cap1.05
Enterprise Value/Revenue1.25
Enterprise Value/Gross Profit6.26
Enterprise Value/Ebitda1.84
Forecast
1Y Price Target
$19.90Price Target Upside4.13% Upside
Rating ConsensusHold
Number of Analyst Covering5
Morgan Stanley Direct Lending Fund Business Overview & Revenue Model
Company DescriptionMorgan 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 MoneyMSDL generates revenue through interest income and fees associated with the loans and credit facilities it provides to middle-market businesses. The fund typically charges interest on the principal amount of loans extended to borrowers, which is a primary source of income. Additionally, MSDL may earn arrangement fees, commitment fees, and other transaction-based fees for structuring and managing these financing deals. Strategic partnerships with private equity firms and other financial institutions can enhance deal flow and optimize capital allocation, further contributing to the fund's profitability. The performance of MSDL is also influenced by the creditworthiness of its borrowers and broader economic conditions impacting the middle-market sector.
Morgan Stanley Direct Lending Fund Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q1-2025)
| % Change Since: -0.78%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted several positive aspects such as strong net investment income, increased new investment commitments, and a significant milestone in committed capital. Challenges included a decrease in net investment income due to expired fee waivers and credit spread widening impacting unrealized losses. The uncertainty surrounding tariffs affecting M&A activity also posed a challenge. Overall, the positives and negatives appear to be balanced.Q1-2025 Updates
Positive Updates
Strong Net Investment Income
Morgan Stanley Direct Lending generated strong operating results with net investment income of $0.52 per share, exceeding the $0.50 dividend declared.
Increase in New Investment Commitments
The first quarter saw new investment commitments totaling approximately $233 million, marking a meaningful increase in gross deployment relative to the prior quarter.
Sponsor-Backed Business Milestone
Morgan Stanley Direct Lending's sponsor-backed direct lending business in North America surpassed $20 billion in committed capital.
Diverse Portfolio Composition
The portfolio comprised 96% first lien debt with significant exposure to software and insurance services sectors, which accounted for 19.5% and 12% of the portfolio at fair value, respectively.
Low Non-Accrual Rate
Non-accruals remained minimal at just 20 basis points of the portfolio at cost, with one portfolio company removed from non-accrual status during the quarter.
Negative Updates
Credit Spread Widening Impact
The net change in unrealized losses was $17 million for the first quarter, driven in part by credit spread widening within the secondary market.
Decline in Net Investment Income
Net investment income for the first quarter decreased to $46.2 million or $0.52 per share, compared to $50.7 million or $0.57 per share from the prior quarter, partly due to the expiration of IPO-related fee waivers.
Impact of Tariff Volatility
Tariff-driven volatility has delayed the anticipated recovery in M&A activity, leading to subdued LBO activity as private equity firms await more clarity.
Company Guidance
During the first quarter of 2025, Morgan Stanley Direct Lending Fund reported a net investment income of $0.52 per share, which exceeded the $0.50 per share dividend declared, driven by strong underlying credit performance with low contributions from payment in kind. New investment commitments totaled approximately $233 million, representing a significant increase in gross deployment compared to the previous quarter, with repayments amounting to $202 million. The fund's debt to net asset value (NAV) ratio modestly increased from 1.08 times to 1.11 times. The portfolio ended the quarter with a net fair value of $3.8 billion, composed of 96% first lien debt. The average yield on debt and income-producing investments was 10.2% at cost and 10.3% at fair value. The fund's net change in unrealized losses was $17 million due to credit spread widening in the secondary market. Additionally, Morgan Stanley Direct Lending Fund's NAV per share decreased slightly to $20.65 from $20.81 in the prior period. The company declared a regular distribution of $0.50 per share for the second quarter of 2025 and established a $300 million at-the-market equity issuance program to raise capital efficiently under supportive market conditions.Morgan Stanley Direct Lending Fund Financial Statement Overview
Summary
Morgan Stanley Direct Lending Fund shows strong revenue growth and a robust balance sheet with no debt, indicating solid financial health. However, challenges include volatile EBIT margins and recent cash flow issues, suggesting a need for improved operational efficiency and cash management.Income Statement
Morgan Stanley Direct Lending Fund has shown robust growth in total revenue over the years, with a significant increase from $24 million in 2020 to $253 million in 2024. The net profit margin has also remained strong, with net income consistently climbing, indicating effective cost management and profitability. However, the EBIT and EBITDA margins have been volatile, with EBIT at zero in 2024, which could indicate challenges in operational efficiency.85
Very Positive
Balance Sheet
The company maintains a strong financial position with zero total debt in 2024, indicating exceptional financial stability. The equity ratio remains solid, suggesting prudent financial management. However, the return on equity has been fluctuating, reflecting variable profitability relative to shareholder equity.90
Very Positive
Cash Flow
The cash flow statement shows mixed results. While the company has maintained positive free cash flow in previous years, 2024 saw a significant negative free cash flow, pointing to potential liquidity issues. The operating cash flow to net income ratio has also been negative recently, indicating discrepancies between earnings and cash generation.75
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 328.50M | 253.06M | 366.34M | 230.80M | 121.63M | 24.06M |
| Gross Profit | 277.92M | 253.06M | 316.51M | 199.92M | 100.50M | 19.64M |
| EBITDA | 169.38M | 0.00 | 343.90M | 217.66M | 104.27M | 22.02M |
| Net Income | 210.11M | 215.56M | 231.01M | 48.54M | 83.25M | 18.30M |
Balance Sheet | ||||||
| Total Assets | 3.91B | 3.91B | 3.31B | 2.99B | 2.49B | 656.81M |
| Cash, Cash Equivalents and Short-Term Investments | 69.40M | 72.37M | 69.70M | 81.22M | 74.15M | 11.26M |
| Total Debt | 0.00 | 1.97B | 53.00K | 40.00K | 268.00K | 198.00K |
| Total Liabilities | 2.09B | 2.07B | 1.59B | 71.00K | 57.00K | 15.00K |
| Stockholders Equity | 1.82B | 1.84B | 1.72B | 2.99B | 2.49B | 656.81M |
Cash Flow | ||||||
| Free Cash Flow | -104.09M | -373.54M | 185.78M | 121.59M | 67.69M | 12.43M |
| Operating Cash Flow | -104.09M | -373.54M | 185.78M | 121.59M | 67.69M | 12.43M |
| Investing Cash Flow | -1.80M | 0.00 | -269.60M | -551.43M | -1.73B | -625.78M |
| Financing Cash Flow | 290.42M | 376.19M | 72.31M | 436.90M | 1.72B | 624.58M |
Morgan Stanley Direct Lending Fund Technical Analysis
Negative
19.11
Price Trends
19.41
Negative
19.64
Negative
19.57
Negative
Market Momentum
-0.10
Positive
42.57
Neutral
28.90
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 19.11 is below the 20-day moving average (MA) of 19.43, below the 50-day MA of 19.41, and below the 200-day MA of 19.57, indicating a bearish trend. The MACD of -0.10 indicates Positive momentum. The RSI at 42.57 is Neutral, neither overbought nor oversold. The STOCH value of 28.90 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 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 3 New Risks
1.
Our investments in securities or assets of publicly traded companies are subject to the risks inherent in investing in public companies. Q4, 2024
2.
Holders of any preferred stock that we may issue will have the right to elect certain members of our Board of Directors and have class voting rights on certain matters. Q4, 2024
3.
Our investments in OID and PIK instruments may expose us to investment risk. Q4, 2024
Morgan Stanley Direct Lending Fund Peers Comparison
Overall Rating
UnderperformOutperform
Sector (68)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $1.67B | 8.79 | 10.59% | 10.46% | 8.41% | -22.34% | |
75 Outperform | $819.59M | 8.74 | 10.56% | 10.97% | 37.08% | -2.29% | |
69 Neutral | $1.09B | 22.06 | 26.94% | ― | 14.75% | 77.59% | |
68 Neutral | AU$8.71B | 9.74 | 7.48% | 12.57% | 28.69% | 8.48% | |
54 Neutral | $484.29M | ― | -46.84% | ― | 51.96% | 60.33% | |
53 Neutral | $463.91M | 29.05 | 3.05% | 10.68% | 1.13% | -86.09% | |
51 Neutral | $1.99B | ― | 117.42% | ― | ― | ― |
* General Sector Average
Performance Comparison
MSDL
Morgan Stanley Direct Lending Fund
19.11
-2.09
-9.86%
TREE
Lendingtree
35.78
-4.16
-10.42%
PSBD
Palmer Square Capital BDC Inc.
14.33
-0.32
-2.18%
NCDL
Nuveen Churchill Direct Lending Corp.
16.30
0.54
3.43%
PACS
PACS Group Inc
12.80
-17.39
-57.60%
IBTA
Ibotta, Inc. Class A
38.32
-36.74
-48.95%
Morgan Stanley Direct Lending Fund Corporate Events
Financial Disclosures
Morgan Stanley Direct Lending Fund Q1 Results Announcement
Neutral
Apr 8, 2025
On April 8, 2025, Morgan Stanley Direct Lending Fund announced it will release its first quarter financial results for the period ending March 31, 2025, on May 8, 2025, after market close. The company will hold an earnings call on May 9, 2025, to discuss these results, potentially impacting stakeholders’ insights into its financial health and operations.
Spark’s Take on MSDL Stock
According to Spark, TipRanks’ AI Analyst, MSDL is a Outperform.
Morgan Stanley Direct Lending Fund shows strong financial stability with zero debt and a solid revenue base. Despite recent cash flow challenges and operational efficiency issues, the stock’s attractive valuation and positive technical indicators support a favorable outlook. Management’s confidence in navigating future challenges and opportunities further bolsters the stock’s potential.
To see Spark’s full report on MSDL stock, click here.
DividendsFinancial Disclosures
Morgan Stanley Direct Lending Fund Reports Q4 2024 Results
Neutral
Feb 27, 2025
On February 27, 2025, Morgan Stanley Direct Lending Fund announced its financial results for the fourth quarter and fiscal year ending December 31, 2024. The company reported a net investment income of $50.7 million, a decrease from the previous quarter, and declared a regular dividend of $0.50 per share for the first quarter of 2025. The fund’s investment portfolio had a fair value of approximately $3.8 billion, with a debt-to-equity ratio of 1.08x as of December 31, 2024. The announcement highlights the company’s ongoing commitment to providing shareholder value despite a slight decrease in net investment income and an increase in net expenses.
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.