Analyst Derek Hewett of Bank of America Securities reiterated a Sell rating on Carlyle Secured Lending Inc, reducing the price target to $12.00.
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Derek Hewett has given his Sell rating due to a combination of factors impacting Carlyle Secured Lending Inc. Despite reporting a relatively stable quarter with improvements in non-accruals and capital deployment, the company faces challenges such as yield pressure affecting top-line growth and an increase in payment-in-kind income. Additionally, the core earnings per share (EPS) fell slightly below the dividend payout, indicating potential issues with near-term profitability.
Furthermore, the adjusted core EPS was slightly below market expectations, and the company’s GAAP EPS was affected by modest portfolio depreciation. Although Carlyle Secured Lending is maintaining its dividend, the lower rates and spreads present concerns. The company’s management has noted that while they are working on initiatives to improve returns, these efforts will take time to materialize. Consequently, Hewett has lowered the price objective and earnings forecasts due to industry-wide multiple contractions and credit concerns, leading to a cautious outlook on the stock.