OTF Should I Buy
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Blue Owl Technology Finance Corp (OTF) is not a strong buy for a beginner, long-term investor at this moment. While the company has shown impressive financial growth in its latest quarter, the technical indicators and analyst ratings suggest a neutral to cautious outlook. Additionally, the lack of strong trading signals and the broader concerns in the software lending space make it prudent to wait for clearer positive catalysts before investing.
The technical indicators are mixed. The MACD is positive and expanding, which is a bullish sign, but the RSI is neutral at 48.846, and the moving averages are bearish (SMA_200 > SMA_20 > SMA_5). The stock is trading near its pivot level of 12.65, with resistance at 13.319 and support at 11.98. Overall, the technical setup does not strongly support a buy at this time.
The company reported strong financial growth in Q3 2025, with revenue up 115.38% YoY and net income up 96.54% YoY. EPS also increased significantly by 92.31% YoY. Additionally, the company focuses on lending to enterprise software companies, which could be a differentiated growth story in the business development company space.
Analysts have expressed concerns about below-peer-average ROE in 2026 due to increased portfolio leverage. BofA recently lowered its price target from $15 to $14 due to industry-wide concerns about private credit and lower rates. Additionally, Morgan Stanley highlighted increasing risks in software lending, with the S&P Software Index down 22% this year. The bearish moving averages and lack of strong trading signals further add to the cautious sentiment.
In Q3 2025, the company demonstrated strong financial performance with revenue increasing to $426.86 million (up 115.38% YoY), net income rising to $234.94 million (up 96.54% YoY), and EPS improving to 0.5 (up 92.31% YoY). However, gross margin remained flat at 0%.
Analysts have a neutral to cautious outlook. RBC Capital initiated coverage with a Sector Perform rating and a $15 price target, noting potential differentiation but concerns about below-peer-average ROE in 2026. BofA lowered its price target to $14 due to industry-wide concerns and a lower earnings forecast for 2026.
