Brian McKenna, an analyst from JMP Securities, reiterated the Buy rating on Sixth Street Specialty Lending (TSLX – Research Report). The associated price target is $21.00.
Brian McKenna’s Buy rating for Sixth Street Specialty Lending is a result of several important factors. Firstly, the company’s third quarter earnings were strong, exceeding both McKenna’s and consensus estimates. This strong performance was largely due to higher-than-expected investment income, which was able to offset higher expenses. Additionally, the company’s Board declared a 4Q23 base dividend, as well as a supplemental dividend, which provides further value for shareholders.
Secondly, Sixth Street Specialty Lending demonstrated a significant growth in its Net Asset Value (NAV), which is indicative of the overall health and conservative positioning of its investment portfolio. Credit quality also remained robust, with no new non-accruals added during the quarter. In terms of leverage, the company’s GAAP leverage is well within the management’s target range, indicating a strong financial position. Lastly, the investment portfolio showed a modest increase, despite lighter new fundings and an uptick in exits and repayments. This continued growth, combined with the fact that nearly all of the company’s income earning debt investments are floating rate, further supports McKenna’s Buy rating.
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Sixth Street Specialty Lending (TSLX) Company Description:
TPG Specialty Lending, Inc. is a specialty finance company, which focuses on lending to middle-market companies. Its investment comprises first-lien debt, second-lien debt, mezzanine and unsecured debt and equity, and other investments. The company was founded in July 2011 and is headquartered in Fort Worth, TX.
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