
Ares Capital (ARCC) Stock Forecast & Price Target
Ares Capital (ARCC) Analyst Ratings
Bulls say
Ares Capital Corporation has demonstrated a positive financial trajectory, with a 0.4% sequential increase in net asset value (NAV) per share, reaching $19.90, accompanied by robust net investment income (NII) and favorable unrealized/realized gains. The company's investment strategy, primarily focused on first and second lien senior secured loans, positions it well to benefit from a potential rise in interest rates of over 100 basis points, which is expected to enhance NII further. Additionally, despite a slight increase in non-accruals to 2.0% of the portfolio, the underlying credit quality remains strong and well below historical averages, indicating resilience and stability in its investment portfolio.
Bears say
The financial outlook for Ares Capital appears negative due to several fundamental factors. The company’s reliance on floating rate instruments indexed to LIBOR, without a corresponding LIBOR floor for its borrowing facilities, could lead to a decline in net investment income in the event of rising interest rates, creating a significant vulnerability in its revenue streams. Additionally, the concentration of structuring fees in the revenue mix, comprising approximately 10-15% of total revenues, raises concerns about potential earnings volatility should there be a broad cessation in deal activity, further exacerbating financial instability.
This aggregate rating is based on analysts' research of Ares Capital and is not a guaranteed prediction by Public.com or investment advice.
Ares Capital (ARCC) Analyst Forecast & Price Prediction
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