Keefe lowers Oaktree Specialty target, says dividend at risk

Keefe Bruyette analyst Paul Johnson lowered the firm’s price target on Oaktree Specialty Lending (OCSL) to $17 from $18 and keeps a Market Perform rating on the shares. The firm says that while non-accruals declined slightly, credit issues have persisted for Oaktree, and this quarter was not an improvement. The analyst reduced estimates due to a lower base rate projection and portfolio yield compression. Keefe believes the company’s dividend is at risk. Despite the positive fee waiver and prior base fee reduction, Oaktree’s net interest income is currently below the dividend, and the dividend seems unsustainable, the analyst tells investors in a research note.