UBS has revised its outlook for Ares Capital (ARCC, Financial), reducing the price target from $22 to $21 while maintaining a Neutral rating on the stock. This adjustment comes as part of UBS's expectations for the first-quarter earnings of business development companies.
The primary focus for investors remains centered on the credit quality outlook amidst increasing economic uncertainties. Despite the sector's recent pullback making valuations more enticing, concerns about credit quality continue to loom over Ares Capital. Additionally, the potential for earnings to be impacted by lower short-term interest rates is a pressing issue.
UBS’s decision to adjust price targets reflects an anticipated decrease in return on equity, attributed to slower loan growth and reduced target multiples in light of the prevailing economic uncertainties. As Ares Capital navigates these challenges, investors will closely monitor how the company manages these headwinds in the upcoming earnings report.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 12 analysts, the average target price for Ares Capital Corp (ARCC, Financial) is $23.25 with a high estimate of $26.00 and a low estimate of $22.00. The average target implies an upside of 15.73% from the current price of $20.09. More detailed estimate data can be found on the Ares Capital Corp (ARCC) Forecast page.
Based on the consensus recommendation from 14 brokerage firms, Ares Capital Corp's (ARCC, Financial) average brokerage recommendation is currently 1.9, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Ares Capital Corp (ARCC, Financial) in one year is $38.50, suggesting a upside of 91.64% from the current price of $20.09. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Ares Capital Corp (ARCC) Summary page.
