UBS Group Cuts Ares Capital (NASDAQ:ARCC) Price Target to $19.00

Key Points

• UBS Group cut its price target on Ares Capital from $21.00 to $19.00 and maintained a "neutral" rating, implying roughly a 6.38% upside from the current share price.
• Multiple brokers have trimmed targets (JPMorgan to $19, Wells Fargo to $20, RBC to $22), yet MarketBeat's consensus remains a Moderate Buy with an average target of $21.38.
• Insider buying was reported: CFO Scott C. Lem and CEO Michael K. Schnabel recently purchased shares, increasing their stakes while the stock trades around $17.86, below its 50- and 200-day moving averages.

Ares Capital (NASDAQ:ARCC - Get Free Report) had its price objective lowered by investment analysts at UBS Group from $21.00 to $19.00 in a research note issued to investors on Friday,Benzinga reports. The brokerage presently has a "neutral" rating on the investment management company's stock. UBS Group's price target would suggest a potential upside of 6.38% from the stock's current price.

A number of other analysts have also issued reports on ARCC. Weiss Ratings restated a "hold (c+)" rating on shares of Ares Capital in a research report on Monday, December 29th. JPMorgan Chase & Co. reduced their price target on Ares Capital from $22.00 to $19.00 and set an "overweight" rating on the stock in a research note on Friday. Wall Street Zen downgraded Ares Capital from a "hold" rating to a "sell" rating in a research report on Saturday, February 7th. Wells Fargo & Company dropped their target price on Ares Capital from $21.00 to $20.00 and set an "overweight" rating for the company in a research note on Thursday, February 5th. Finally, Royal Bank Of Canada cut their price objective on Ares Capital from $23.00 to $22.00 and set an "outperform" rating on the stock in a report on Monday, February 9th. Seven research analysts have rated the stock with a Buy rating and two have assigned a Hold rating to the stock. According to data from MarketBeat, the company presently has a consensus rating of "Moderate Buy" and an average target price of $21.38.

Ares Capital Price Performance

Shares of ARCC traded down $0.21 during trading hours on Friday, reaching $17.86. 9,213,602 shares of the company traded hands, compared to its average volume of 7,581,477. The stock has a market capitalization of $12.82 billion, a PE ratio of 9.60 and a beta of 0.59. The stock has a fifty day simple moving average of $19.74 and a 200 day simple moving average of $20.31. Ares Capital has a fifty-two week low of $17.59 and a fifty-two week high of $23.42. The company has a quick ratio of 1.70, a current ratio of 1.70 and a debt-to-equity ratio of 1.12.

Ares Capital (NASDAQ:ARCC - Get Free Report) last released its earnings results on Wednesday, February 4th. The investment management company reported $0.50 earnings per share (EPS) for the quarter, meeting analysts' consensus estimates of $0.50. Ares Capital had a net margin of 42.56% and a return on equity of 9.89%. The company had revenue of $793.00 million for the quarter, compared to analyst estimates of $795.20 million. During the same period in the prior year, the firm earned $0.55 EPS. The firm's quarterly revenue was up 4.5% on a year-over-year basis. As a group, research analysts predict that Ares Capital will post 2.19 EPS for the current fiscal year.

Insider Buying and Selling at Ares Capital

In related news, CFO Scott C. Lem acquired 5,186 shares of the firm's stock in a transaction on Friday, February 6th. The stock was bought at an average cost of $19.29 per share, with a total value of $100,037.94. Following the acquisition, the chief financial officer directly owned 39,463 shares in the company, valued at approximately $761,241.27. The trade was a 15.13% increase in their ownership of the stock. The acquisition was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through this link. Also, CEO Michael Kort Schnabel bought 12,500 shares of the business's stock in a transaction dated Thursday, February 5th. The stock was bought at an average price of $19.13 per share, for a total transaction of $239,125.00. Following the purchase, the chief executive officer owned 40,500 shares in the company, valued at approximately $774,765. This represents a 44.64% increase in their position. Additional details regarding this purchase are available in the official SEC disclosure. Corporate insiders own 0.48% of the company's stock.

Institutional Trading of Ares Capital

Several institutional investors and hedge funds have recently bought and sold shares of the company. City Holding Co. increased its position in Ares Capital by 444.4% in the third quarter. City Holding Co. now owns 1,225 shares of the investment management company's stock worth $25,000 after buying an additional 1,000 shares during the period. Palladiem LLC acquired a new position in shares of Ares Capital during the fourth quarter valued at $26,000. SWAN Capital LLC bought a new position in shares of Ares Capital during the third quarter worth about $27,000. Sankala Group LLC acquired a new stake in shares of Ares Capital in the 4th quarter worth about $28,000. Finally, NBT Bank N A NY bought a new stake in Ares Capital in the 3rd quarter valued at about $31,000. Institutional investors and hedge funds own 27.38% of the company's stock.

Ares Capital News Roundup

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

• Positive Sentiment: Analyst consensus and buy-side interest — several Wall Street analysts remain constructive on ARCC and the stock appears in lists of high-yield, passive-income names, supporting demand from income-focused investors. Wall Street Bulls Look Optimistic About Ares Capital (ARCC): Should You Buy?
• Positive Sentiment: Appeal to income investors — outlets highlighting ARCC among “passive income kings” can sustain buying interest from dividend-seeking investors given ARCC’s high yield profile. Risk-Savvy Investors Love 4 Passive Income Kings Yielding 10% and More
• Neutral Sentiment: Unusual options activity flagged — options flow was noted as unusually large; this can reflect hedging or speculative positioning but is not definitive about direction. Monitor for follow-through in volume/put-call skew. Ares Capital Target of Unusually Large Options Trading NASDAQ: ARCC
• Neutral Sentiment: Reported short-interest figures appear unreliable — recent short-interest posts show zeros/NaN, suggesting data issues rather than a meaningful short squeeze or ramp. Treat these entries cautiously when assessing bearish pressure. (source: internal short-interest reports)
• Negative Sentiment: Sector credit risk — coverage on “PIK” (paid-in-kind) loans warns that some borrowers are paying interest in IOUs rather than cash, a development that raises credit-risk scrutiny for business-development companies and BDC lenders like ARCC. That macro/credit concern can pressure the stock. ‘PIK’ Loans Are the Market’s Latest Concern. What They Are and Why They Matter.
• Negative Sentiment: Analyst price-target cut — JPMorgan lowered its ARCC target from $22 to $19 while keeping an overweight rating; the cut reduces upside expectations and likely weighed on sentiment. Benzinga
• Negative Sentiment: Recent intraday/near-term price weakness — market wrap pieces reporting a multi-percent intraday decline likely amplified selling momentum as investors digested the above negative signals. Ares Capital (ARCC) Registers a Bigger Fall Than the Market: Important Facts to Note

Ares Capital Company Profile

Ares Capital Corporation NASDAQ: ARCC is a publicly traded business development company (BDC) that specializes in providing debt and equity financing solutions to U.S. middle-market companies. As a BDC, Ares Capital offers investors access to a diversified portfolio of tailored credit investments, including senior secured loans, unitranche financing, mezzanine debt and equity co-investments. The firm's flexible capital structures are designed to support companies seeking growth capital, refinancing or strategic acquisitions.

Through its credit platform, Ares Capital focuses on originations, underwriting and portfolio management across a range of industries, with a particular emphasis on sectors such as healthcare, technology, industrials and business services.

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