The rating for Oaktree Specialty Lending (OCSL, Financial) has been upgraded by B. Riley's analyst, Sean-Paul Adams, moving from a Sell to a Neutral stance. This change comes with a revised price target of $14, a slight decrease from the previous $15, as coverage of the company has been reassigned. According to the analyst, while overall credit trends appear stable across various portfolios and dividend coverage is well supported, narrower spreads, reduced prepayment activities, and lower expectations for origination activity are impacting short-term earnings prospects.
The firm highlights that its Buy ratings are indicative of distinctive origination approaches, promising returns on equity, and stable-to-improving portfolio metrics, all of which are crucial in the current market climate.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 5 analysts, the average target price for Oaktree Specialty Lending Corp (OCSL, Financial) is $14.30 with a high estimate of $16.00 and a low estimate of $13.00. The average target implies an upside of 1.31% from the current price of $14.12. More detailed estimate data can be found on the Oaktree Specialty Lending Corp (OCSL) Forecast page.
Based on the consensus recommendation from 7 brokerage firms, Oaktree Specialty Lending Corp's (OCSL, Financial) average brokerage recommendation is currently 2.9, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Oaktree Specialty Lending Corp (OCSL, Financial) in one year is $0.03, suggesting a downside of 99.79% from the current price of $14.115. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Oaktree Specialty Lending Corp (OCSL) Summary page.
OCSL Key Business Developments
Release Date: May 01, 2025
- Adjusted Net Investment Income: $39 million or $0.45 per share, down from $45 million or $0.54 per share in the previous quarter.
- Net Asset Value: $16.75 per share, compared to $17.63 in the prior quarter.
- Investments on Non-Accrual Status: Increased to 4.6% of fair market value and 7.6% of cost, up from 3.9% and 5.1% respectively in the first quarter.
- Dividend: Base dividend of $0.40 per share and a variable supplemental dividend of $0.02 per share for the second quarter.
- Net Leverage Ratio: 0.93 times, down from 1.03 times last quarter.
- Total Debt Outstanding: $1.47 billion with a weighted average interest rate of 6.7%.
- Liquidity: Approximately $1.1 billion, including $98 million of cash and $1 billion of undrawn capacity on credit facilities.
- Investment Commitments: $407 million across 32 investments, compared to $198 million in commitments last quarter.
- Portfolio Companies' Median EBITDA: Approximately $158 million, a $16 million increase from the prior quarter.
- Weighted Average Yield on New Debt Investments: 9.5%, slightly down from 9.6% in the prior quarter.
- Joint Ventures Investments: $440 million, with an annualized ROE of approximately 10.6%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Oaktree Specialty Lending Corp (OCSL, Financial) successfully issued new unsecured bonds maturing in 2030, refinancing existing bonds and reducing interest expenses.
- The company received nearly $100 million from debt investment repayments, realized at small premiums compared to previous valuations.
- OCSL announced a base dividend of $0.40 per share and a supplemental dividend of $0.02 per share, reflecting a commitment to shareholder returns.
- The company has ample liquidity with approximately $1.1 billion available, including $98 million in cash and $1 billion in undrawn credit capacity.
- OCSL's portfolio remains focused on senior secured loans, with 84% invested in such loans, emphasizing risk mitigation and stability.
Negative Points
- Adjusted net investment income decreased to $39 million or $0.45 per share from $45 million or $0.54 per share in the previous quarter.
- Investments on non-accrual status increased to 4.6% and 7.6% of fair market value and costs, respectively, indicating ongoing challenges with certain portfolio companies.
- The net asset value per share declined to $16.75 from $17.63 in the prior quarter, reflecting portfolio write-downs.
- The company faced markdowns on investments in Mosaic Companies and SIO2, with significant reductions in their valuations.
- Market volatility and uncertainty, particularly related to tariffs and economic outlook, are expected to impact future M&A activity and portfolio performance.
