Analyst Finian O’Shea of Wells Fargo maintained a Hold rating on FS KKR Capital (FSK – Research Report), with a price target of $18.50.
Finian O’Shea has given his Hold rating due to a combination of factors influencing FS KKR Capital’s financial health and future income potential. The company’s adjusted net operating income and the addition of new non-accrual assets, including its largest credit exposure to Kellermeyer Bergensons Services, signal caution. Additionally, several investments have been made non-accrual, which now represent a significant percentage of the portfolio both at cost and fair value, suggesting potential further declines in net operating income.
In light of these credit concerns and the aggressive fee structure that may prioritize management’s performance fee over shareholder recoveries, O’Shea has revised downwards both the net operating income estimates for the upcoming years and the price target for FS KKR Capital’s stock. This conservative outlook, coupled with the expected increase in borrowing costs and downward pressure on yields, supports the Equal Weight (Hold) rating, indicating a neutral stance on the company’s stock until clearer signs of recovery and stability emerge.
In another report released yesterday, Compass Point also reiterated a Hold rating on the stock with a $19.50 price target.
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FS KKR Capital (FSK) Company Description:
FS KKR Capital Corp. is an externally managed, non-diversified, closed-end management investment and finance company that invests primarily in the debt securities of private middle market U.S. companies. Its objectives are to generate current income and, to a lesser extent, long-term capital appreciation. The company was founded by Michael Craig Forman on December 21, 2007 and is headquartered in Philadelphia, PA.
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