UBS Reiterates Buy on Ares Capital (ARCC) Following Investment Community Presentation

UBS reiterated a Buy rating and $20.00 price target on Ares Capital (NASDAQ: ARCC) following an investment community presentation. To offset earnings drag and capitalizing on the opportunity of no longer being restricted by the GE agreement as well as better competitive dynamics post-GE sponsor finance sale, ARCC plans to increase syndications of first lien pieces of larger financings.

Analyst Matthew Howlett commented, "ARCC hosted an investment community presentation yesterday afternoon. Much of the presentation highlighted the broader Ares credit platform and the associated benefits to ARCC, the current state of credit markets, both the liquid high yield and middle markets, and ARCC management's view of the credit cycle. While these portions were informative, of greatest investor interest was the SSLP/SDLP discussion. Management believes the SSLP wind down will be a $0.02 drag on earnings per quarter in the near term, although ARCC expects the replacement SDLP to generate similar risk-adjusted returns longer term. Refinancing the SSLP portfolio remains a focus, and ARCC is in active discussions around several recapitalization options including securitization, a bank line or refinancing each loan individually. While some uncertainty around the program remains, given the ~3% bounce in the stock yesterday, the market viewed improved clarity positively in our view."

For an analyst ratings summary and ratings history on Ares Capital click here. For more ratings news on Ares Capital click here.

Shares of Ares Capital closed at $14.48 yesterday.

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