JMP Securities analyst Brian McKenna has reiterated their bullish stance on OBDC stock, giving a Buy rating on April 17.
Brian McKenna has given his Buy rating due to a combination of factors influencing the performance and valuation of Blue Owl Capital. The stock has recently aligned with its net asset value (NAV), trading at approximately 1.01 times the book value, marking a significant turnaround after trading well below book value in the past year. The company’s focused execution and commitment to returning capital to shareholders, exemplified by the payment of substantial supplemental dividends, have played a pivotal role in the stock’s impressive appreciation of roughly 20% since October and 35% from the end of 2022. Additionally, the overall industry and broader equity market conditions have provided strong tailwinds that support the company’s current valuation.
Furthermore, McKenna posits that Blue Owl Capital’s sustained excellence in operations and its status as a diversified direct lender managed by a leading alternative asset manager justify a valuation above its current book value. With a history of growing NAV through the economic cycle and consistently producing double-digit return on equity (ROE), the expectation is for the stock to potentially trade between 1.05 and 1.10 times the book value, similar to its high-quality peers. The upward revision of the price target to $16.50, from the previous $16.00, reflects a slightly higher book value multiple based on forward estimates, and suggests that with continued strong performance, the stock could see further valuation improvements.
In another report released on April 17, Oppenheimer also initiated coverage with a Buy rating on the stock with a $16.00 price target.
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Blue Owl Capital (OBDC) Company Description:
Owl Rock Capital Corp, non traded business development company, seeks investment opportunities in middle market companies located in the US with an EBITDA of $10 to $250 million and annual revenue of $50 million to $2.5 billion. It focuses on broad range of sectors including business services, healthcare services, pharma & healthcare technology, aerospace & defences, software & technology and manufacturing & industrials. The fund provides financing in the form of senior secured or unsecured loans, subordinated loans or mezzanine loans and a lesser extent, equity-related securities and warrants for growth, acquisitions, market or product expansion, re-financings and recapitalizations. Its investment size ranging from $20 to $250 million and it also acts as a lead investor.
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