Ares Capital (NASDAQ:ARCC) Stock Rating Raised to Buy at UBS Group

Key Points

• UBS upgraded Ares Capital to “Buy” from “Neutral” and set a $21 price target, implying 10.5% upside from the previous close.
• Analyst sentiment is broadly positive, with nine Buy ratings and two Holds producing a consensus “Moderate Buy” rating and an average target price of $20.39.
• Ares Capital’s latest quarterly results fell short of expectations: EPS was $0.46 versus $0.48 expected, while revenue declined 2.4% year over year to $763 million.

Ares Capital (NASDAQ:ARCC - Get Free Report) was upgraded by analysts at UBS Group from a "neutral" rating to a "buy" rating in a research report issued on Thursday, MarketBeat Ratings reports. The firm currently has a $21.00 price target on the investment management company's stock. UBS Group's price target suggests a potential upside of 10.50% from the company's previous close.

Several other brokerages have also commented on ARCC. Citigroup reissued a "market outperform" rating on shares of Ares Capital in a report on Wednesday. Keefe, Bruyette & Woods reduced their target price on shares of Ares Capital from $21.00 to $20.00 and set an "outperform" rating on the stock in a report on Thursday, July 30th. Wall Street Zen upgraded shares of Ares Capital from a "sell" rating to a "hold" rating in a research report on Saturday, September 19th. Weiss Ratings reiterated a "hold (c)" rating on shares of Ares Capital in a research report on Friday, September 4th. Finally, JPMorgan Chase & Co. reduced their target price on Ares Capital from $19.00 to $18.50 and set an "overweight" rating for the company in a report on Thursday, July 2nd. Nine analysts have rated the stock with a Buy rating and two have assigned a Hold rating to the stock. According to MarketBeat.com, the stock currently has a consensus rating of "Moderate Buy" and an average target price of $20.39.

Ares Capital Price Performance

Shares of NASDAQ:ARCC traded down $0.12 during midday trading on Thursday, reaching $19.01. 3,023,767 shares of the company were exchanged, compared to its average volume of 5,753,607. Ares Capital has a one year low of $17.40 and a one year high of $21.14. The company has a current ratio of 1.00, a quick ratio of 1.28 and a debt-to-equity ratio of 1.08. The business's fifty day moving average is $19.24 and its two-hundred day moving average is $19.04. The stock has a market cap of $13.73 billion, a PE ratio of 15.59 and a beta of 0.61.

Ares Capital (NASDAQ:ARCC - Get Free Report) last posted its quarterly earnings results on Tuesday, October 27th. The investment management company reported $0.46 EPS for the quarter, missing the consensus estimate of $0.48 by ($0.02). Ares Capital had a return on equity of 9.72% and a net margin of 28.34%. The company had revenue of $763.00 million during the quarter, compared to analysts' expectations of $776.34 million. During the same period in the prior year, the business earned $0.50 EPS. The company's quarterly revenue was down 2.4% on a year-over-year basis. As a group, analysts predict that Ares Capital will post 1.89 earnings per share for the current year.

Hedge Funds Weigh In On Ares Capital

Several institutional investors and hedge funds have recently bought and sold shares of the business. Integras Partners LLC grew its position in shares of Ares Capital by 4.0% in the 3rd quarter. Integras Partners LLC now owns 119,295 shares of the investment management company's stock valued at $2,279,000 after buying an additional 4,538 shares during the last quarter. Integrity Advisory Solutions LLC bought a new position in Ares Capital during the third quarter valued at $195,000. Next Level Wealth Planning LLC bought a new position in shares of Ares Capital in the third quarter worth $68,000. SMH Capital Advisors Inc. purchased a new stake in shares of Ares Capital in the third quarter worth $484,000. Finally, Mirae Asset Global Investments Co. Ltd. purchased a new stake in Ares Capital during the third quarter valued at about $104,000. Hedge funds and other institutional investors own 27.38% of the company's stock.

About Ares Capital

Ares Capital Corporation NASDAQ: ARCC is a business development company that provides financing to middle-market companies. The company primarily invests in first-lien senior secured loans, second-lien loans, subordinated debt, and, to a lesser extent, equity securities. Its investments are generally designed to support acquisitions, recapitalizations, refinancings, growth initiatives, and other corporate activities.

Founded in 2004, Ares Capital is externally managed by Ares Capital Management LLC, an affiliate of Ares Management Corporation.