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Investing.com - RBC Capital downgraded Morgan Stanley Direct Lending (NYSE:MSDL) from Outperform to Sector Perform while lowering its price target to $18.00 from $19.00. The stock currently trades at $17.24, with a market cap of $1.52 billion and has declined 9.49% year-to-date, according to InvestingPro data.
The downgrade reflects RBC Capital’s view that MSDL could generate Net Investment Income Return on Equity (NII ROE) in 2026 closer to the lower end of the range in its Business Development Company (BDC) coverage universe. This aligns with InvestingPro data showing the company’s overall financial health rated as "WEAK," with three analysts having recently revised their earnings downwards for the upcoming period.
RBC Capital analyst Kenneth Lee indicated the firm sees "better relative value elsewhere" in its coverage, though acknowledged management could potentially enhance returns in the future.
The firm revised its estimates following MSDL’s third-quarter results and adjusted its 2026 common dividend assumptions downward.
Despite the downgrade, RBC Capital continues to view favorably MSDL’s ability to leverage Morgan Stanley’s relationships and network for what it describes as a "potentially differentiated origination/sourcing funnel."
In other recent news, Morgan Stanley Direct Lending has been the focus of several analyst updates. Raymond James upgraded the company’s stock rating to Outperform, setting a price target of $18.50. The firm highlighted the company’s strong earnings in recent quarters and potential growth as its joint venture expands. Wells Fargo also upgraded the stock to Overweight, with a price target of $17.00, citing the stock’s discounted trading value and structural return protections. Meanwhile, RBC Capital adjusted its price target to $19.00 from $21.00, while maintaining an Outperform rating. This adjustment follows the company’s second-quarter results and takes into account an updated interest rate outlook. These developments reflect a variety of perspectives from analysts on Morgan Stanley Direct Lending’s financial performance and future prospects.
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