Oaktree Specialty Lending downgraded to Neutral from Overweight at JPMorgan

JPMorgan analyst Melissa Wedel downgraded Oaktree Specialty Lending (OCSL) to Neutral from Overweight with a price target of $15, down from $17, following the Q4 report. The company’s net asset value was modestly lower on additional portfolios marks and realized losses, and as Oaktree Specialty achieved dividend coverage through net interest income after waiving partial incentive fees for the second sequential quarter, the analyst tells investors in a research note. The firm reduced assumed portfolio yield as a function of tighter spreads and lower expected base rates. A re-rating of shares is unlikely without better line of sight to net asset value stability and full dividend coverage through net interest income in light of lower expected base rates, contends JPMorgan.