Oaktree Specialty Lending (NASDAQ:OCSL)‘s stock had its “neutral” rating reissued by stock analysts at National Securities in a note issued to investors on Monday. They currently have a $5.00 price objective on the credit services provider’s stock. National Securities’ target price indicates a potential upside of 13.38% from the company’s current price.
The analysts wrote, “• For fiscal 1Q18, OCSL posted NII/share of $0.09, a penny shy of our estimate and lower than the $0.125/share quarterly dividend. The dividend was, not surprisingly, reduced to $0.085/share the following quarter (we had estimated $0.09/share). However, the uncertainty around the dividend level remains with management preferring to assess this a quarter at a time, which will warrant a discounted valuation in a yield-oriented vehicle. The company has shown no inclination to waive fees to support the $0.085/share dividend.
• Additionally, the company outright refused to consider an incentive fee total return lookback feature, which will likely cause the stock to be valued more in the bottom tier of BDCs, asset quality improvement notwithstanding. The company also was not enthusiastic about repurchases despite the heavy NAV discount and sizable dividend yield, which would generate riskless ROC far beyond what they could earn in the middle market. We are highly disappointed in this.
• Non-accruals at amortized cost (which includes PIK non-accruals) increased modestly to $228.4 million (including SLF exposure) or 13.6% of the portfolio at cost from $225.6 million (including SLF exposure) or 12.8% of the portfolio Q/Q. Unrealized losses pertaining to non-accruals increased $28.5 million Q/Q. The good news is that half of non-accruals are currently in active sales processes.
• Management provided significant detail on its portfolio rotation and said that from 9/30/17 through January 2018 the company has monetized $357 million of legacy investments with $418 million of performing debt investments remaining and over $100 million of equity/LP interest remaining.
• We are revising our fiscal 2018 NII/share estimate to $0.40 from $0.41 and our fiscal 2019 NII/share estimate to $0.42 from $0.40. “
Several other equities analysts have also recently commented on the company. Maxim Group restated a “hold” rating on shares of Oaktree Specialty Lending in a research report on Tuesday, December 26th. BMO Capital Markets reaffirmed a “hold” rating and set a $5.00 price target on shares of Oaktree Specialty Lending in a research note on Monday, January 8th. Keefe, Bruyette & Woods set a $6.00 price target on Oaktree Specialty Lending and gave the stock a “hold” rating in a research note on Thursday, November 30th. Zacks Investment Research raised Oaktree Specialty Lending from a “sell” rating to a “hold” rating in a research note on Monday, October 16th. Finally, JPMorgan Chase & Co. raised Oaktree Specialty Lending from a “neutral” rating to an “overweight” rating and set a $6.00 price target for the company in a research note on Tuesday, February 6th. One analyst has rated the stock with a sell rating, six have issued a hold rating and five have given a buy rating to the company’s stock. The stock has an average rating of “Hold” and an average target price of $5.50.
Oaktree Specialty Lending (NASDAQ:OCSL) last posted its earnings results on Thursday, February 8th. The credit services provider reported $0.09 EPS for the quarter, missing the Thomson Reuters’ consensus estimate of $0.10 by ($0.01). Oaktree Specialty Lending had a positive return on equity of 6.74% and a negative net margin of 95.68%. The business had revenue of $33.88 million for the quarter, compared to analysts’ expectations of $35.00 million. equities research analysts predict that Oaktree Specialty Lending will post 0.37 EPS for the current year.
In related news, Director Craig A. Jacobson bought 31,200 shares of the stock in a transaction dated Wednesday, December 13th. The stock was bought at an average price of $4.80 per share, with a total value of $149,760.00. The acquisition was disclosed in a legal filing with the SEC, which is available at this hyperlink. Also, Director Richard Ruben bought 14,550 shares of the stock in a transaction dated Wednesday, December 6th. The stock was bought at an average cost of $4.82 per share, with a total value of $70,131.00. The disclosure for this purchase can be found here. In the last ninety days, insiders have acquired 362,534 shares of company stock valued at $1,734,287. Corporate insiders own 0.10% of the company’s stock.
Hedge funds and other institutional investors have recently added to or reduced their stakes in the company. Laurel Grove Capital LLC bought a new stake in shares of Oaktree Specialty Lending in the 4th quarter valued at about $1,449,000. River Road Asset Management LLC bought a new stake in shares of Oaktree Specialty Lending in the 4th quarter valued at about $31,142,000. DnB Asset Management AS bought a new stake in shares of Oaktree Specialty Lending in the 4th quarter valued at about $637,000. Confluence Investment Management LLC bought a new stake in shares of Oaktree Specialty Lending in the 4th quarter valued at about $1,520,000. Finally, Bank of Montreal Can bought a new stake in shares of Oaktree Specialty Lending in the 4th quarter valued at about $9,281,000. 35.87% of the stock is owned by institutional investors.
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About Oaktree Specialty Lending
Oaktree Specialty Lending Corporation, formerly Fifth Street Finance Corp., is a specialty finance company. The Company is focused on providing customized one-stop credit solutions to companies with limited access to public or syndicated capital markets. The Company provides companies with flexible financing solutions including first and second lien loans, unsecured and mezzanine loans, and preferred equity.
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