On Monday, Keefe, Bruyette & Woods adjusted their stance on Blue Owl Capital Corp. (NYSE: OBDC), downgrading the firm from Outperform to Market Perform while maintaining a price target of $16.00. The decision comes after the company's net investment income (NII) for the quarter met expectations, but interest income fell short due to the timing of investments. The company's net asset value (NAV) remained stable, and Blue Owl Capital reported an operating and net income return on equity (ROE) of 12.1%.
The analyst noted concerns such as an increase in non-accruals to 2.1% and anticipated challenges due to spread compression in the current year. The firm faces headwinds as loan repayments were high, with a significant portion of second lien loans being repaid and new loan spreads declining. The turnover in Blue Owl Capital's portfolio was approximately 10% in the first quarter of 2024.
Despite these challenges, Blue Owl Capital's shares have shown remarkable growth, with a 45% increase over the past year and a 15% year-to-date total return. However, the analyst believes that after such strong performance, the potential for further upside is limited, prompting a revision of the 2024 estimates and the downgrade to Market Perform. The price target of $16.00 remains unchanged from the previous assessment.
InvestingPro Insights
Recent data from InvestingPro provides a deeper look into Blue Owl Capital Corp.'s (NYSE: OBDC) financial health and market performance. With a market capitalization of $6.4 billion and a P/E ratio of 8.25, the company presents an interesting case for investors looking for value opportunities. Blue Owl Capital has demonstrated strong revenue growth over the last twelve months as of Q1 2024, with an increase of 21.94%, and a quarterly revenue growth of 5.81% in Q1 2024. This indicates a consistent upward trajectory in the company's earnings capability.
InvestingPro Tips highlight several factors that investors should consider. The stock pays a significant dividend to shareholders, with a yield of 10.33%, which is notably high and could be attractive for income-focused portfolios. Additionally, Blue Owl Capital has been profitable over the last twelve months and has seen a strong return over the last three months, with a price total return of 15.4%. This performance is reflected in the stock trading near its 52-week high, at 98.89% of the peak value. For investors interested in stability, the stock generally trades with low price volatility, which might appeal to those with a more conservative investment approach.
For a comprehensive list of actionable insights and additional InvestingPro Tips for Blue Owl Capital, interested readers can explore InvestingPro. There are currently 5 more tips available, which can provide a deeper understanding of the company's financial health and market position. To access these insights and more, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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