Prospect Capital (NASDAQ:PSEC) Cut to Hold at Wall Street Zen

Key Points

• Wall Street Zen downgraded Prospect Capital from “Buy” to “Hold,” while other analysts remain bearish; the stock has an average “Sell” rating and a consensus price target of $2.00.
• Prospect Capital reported quarterly earnings of $0.15 per share and revenue of $155.76 million, beating analyst expectations of $0.11 and $149.80 million, respectively.
• Despite the earnings beat, investors face significant risks, including a high valuation, an approximately 18.4% annualized dividend yield, and concerns over credit quality, portfolio losses, NAV deterioration, and dividend sustainability.

Prospect Capital (NASDAQ:PSEC - Get Free Report) was downgraded by equities research analysts at Wall Street Zen from a "buy" rating to a "hold" rating in a research report issued to clients and investors on Saturday.

Other research analysts have also recently issued research reports about the company. Wells Fargo & Company reduced their price objective on Prospect Capital from $2.50 to $2.00 and set an "underweight" rating on the stock in a research note on Tuesday, May 12th. Weiss Ratings upgraded Prospect Capital from a "sell (d)" rating to a "sell (d+)" rating in a report on Friday, May 29th. Two equities research analysts have rated the stock with a Sell rating, According to MarketBeat.com, Prospect Capital presently has an average rating of "Sell" and a consensus price target of $2.00.

Prospect Capital Stock Performance

Shares of PSEC stock opened at $2.33 on Friday. The company's fifty day simple moving average is $2.24 and its 200-day simple moving average is $2.47. Prospect Capital has a 52 week low of $2.11 and a 52 week high of $3.13. The company has a current ratio of 0.79, a quick ratio of 0.79 and a debt-to-equity ratio of 0.59. The company has a market cap of $1.17 billion, a PE ratio of 46.60 and a beta of 0.79.

Prospect Capital (NASDAQ:PSEC - Get Free Report) last announced its quarterly earnings results on Thursday, August 20th. The financial services provider reported $0.15 earnings per share for the quarter, topping analysts' consensus estimates of $0.11 by $0.04. Prospect Capital had a net margin of 19.33% and a return on equity of 12.11%. The firm had revenue of $155.76 million during the quarter, compared to analysts' expectations of $149.80 million.

Insider Activity

In related news, CEO John F. Barry purchased 1,067,648 shares of the company's stock in a transaction that occurred on Tuesday, June 23rd. The stock was acquired at an average price of $2.27 per share, for a total transaction of $2,423,560.96. Following the completion of the purchase, the chief executive officer owned 89,213,725 shares in the company, valued at approximately $202,515,155.75. This represents a 1.21% increase in their ownership of the stock. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through the SEC website. Insiders have acquired a total of 2,500,648 shares of company stock valued at $5,678,121 in the last three months. 0.03% of the stock is currently owned by insiders.

Institutional Trading of Prospect Capital

Hedge funds and other institutional investors have recently bought and sold shares of the company. Goldman Sachs Group Inc. raised its holdings in shares of Prospect Capital by 29.3% during the first quarter. Goldman Sachs Group Inc. now owns 393,034 shares of the financial services provider's stock worth $1,611,000 after purchasing an additional 89,139 shares during the period. Empowered Funds LLC raised its position in shares of Prospect Capital by 140.0% during the 1st quarter. Empowered Funds LLC now owns 88,397 shares of the financial services provider's stock worth $362,000 after purchasing an additional 51,562 shares during the period. Jump Financial LLC acquired a new stake in shares of Prospect Capital during the 2nd quarter worth approximately $87,000. Qube Research & Technologies Ltd bought a new stake in shares of Prospect Capital in the 2nd quarter worth approximately $116,000. Finally, Raymond James Financial Inc. lifted its holdings in shares of Prospect Capital by 0.5% in the 2nd quarter. Raymond James Financial Inc. now owns 844,465 shares of the financial services provider's stock worth $2,685,000 after purchasing an additional 3,880 shares during the last quarter. 9.06% of the stock is owned by institutional investors.

Key Headlines Impacting Prospect Capital

Here are the key news stories impacting Prospect Capital this week:

• Positive Sentiment: PSEC reported net investment income of $0.15 per common share, exceeding the $0.11 analyst consensus, while quarterly revenue of $155.8 million also topped expectations of $149.8 million. The earnings beat is a near-term positive for the stock. Prospect Capital quarterly earnings report
• Positive Sentiment: The company maintained monthly distributions of $0.035 per share for September, October, and November, equating to an annualized yield of approximately 18.4% at the referenced share price. The payout remains a major attraction for income-oriented investors. Prospect Capital Announces June 2026 Results
• Positive Sentiment: Prospect reported $1.60 billion of cash and undrawn revolving credit capacity and subsequently closed the sale of Valley Electric for approximately $328 million, supporting liquidity and balance-sheet flexibility. Prospect Capital quarterly loss and NAV report
• Neutral Sentiment: Recent earnings-call coverage and the fiscal 2026 10-K provide additional detail on portfolio performance, credit quality, funding, and management’s plans; investors should review these disclosures for evidence that the dividend and NAV can be sustained. PSEC Q4 2026 earnings call transcript
• Negative Sentiment: PSEC posted a $38.1 million net loss, or $0.08 per share, as realized and unrealized investment losses totaled $83.8 million. NAV per share fell to $5.71 from $6.05 in the prior quarter, signaling material portfolio deterioration despite the operating-earnings beat. Prospect Capital NAV decline report
• Negative Sentiment: Analyst commentary warns that the unusually high yield may reflect credit, valuation, and dividend-sustainability risks rather than a simple bargain. Other coverage disputes the size of the reported NAV discount, underscoring uncertainty over the fair value of PSEC’s investments. Prospect Capital high-yield analysis

About Prospect Capital

Prospect Capital Corporation is a publicly traded business development company listed on the Nasdaq stock exchange that specializes in providing private debt and equity financing solutions to middle-market companies across the United States. Structured as a closed-end, non-diversified management investment company under the Investment Company Act of 1940, Prospect Capital offers investors access to a diversified portfolio of senior secured loans, subordinated debt and selective equity interests in privately held businesses.

Since its founding in 2004, Prospect Capital has focused on tailoring financing structures to meet the growth, acquisition and recapitalization needs of its portfolio companies.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.

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