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Investing.com - Keefe, Bruyette & Woods raised its price target on Ares Capital (NASDAQ:ARCC) to $23.00 from $22.00 while maintaining an Outperform rating, citing the company’s sector-leading fundamentals.
KBW noted that Ares Capital reported "a good quarter" despite missing street expectations and experiencing an increase in non-accruals. The firm highlighted that these non-accruals remain less than half the sector average, and Ares was able to generate offsetting gains in its portfolio. According to InvestingPro, the company maintains a "GOOD" overall financial health score, supported by strong profitability metrics.
The business development company (BDC) saw its net asset value increase by 0.4% during the quarter. Ares Capital also exited several equity co-investments, resulting in total realized gains of $34 million net of taxes.
While market activity decreased in the second quarter, KBW reported that Ares Capital reviewed 20% more transactions than in the previous quarter, with momentum building into the second half of the year.
The price target increase to $23.00 was attributed to "an improved credit outlook for the sector," with KBW maintaining its Outperform rating on the belief that Ares Capital "remains the best-positioned BDC in the space."
In other recent news, Ares Capital Corporation reported its financial results for the second quarter of 2025, highlighting stable earnings and strong investment gains. The company achieved a GAAP net income of $0.52 per share and core earnings of $0.50 per share, consistent with the previous quarter. Ares Capital’s total portfolio at fair value increased by 3% from the previous quarter, reaching $27.9 billion. This performance was noted despite market volatility influenced by policy changes. In addition to these financial results, B.Riley upgraded Ares Capital’s stock rating from Neutral to Buy. The upgrade was accompanied by an increase in the price target to $23.50 from $22.50. B.Riley cited the company’s strong performance and portfolio quality as reasons for the upgrade. Ares Capital’s adjusted net investment income of $0.50 per share matched B.Riley’s expectations, further supporting the positive outlook.
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