Bankruptcy Impact on BDCs: The bankruptcy of auto-parts supplier First Brands has raised concerns about business development companies (BDCs), which provide loans to small and mid-sized firms, leading to fears of more issues in the private-credit market.
Caution Against High-Yield BDCs: Investors are advised to be cautious of BDCs like Blue Owl Capital and Prospect Capital Corp, which have high fees and poor long-term performance, making them less attractive despite their high yields.
Alternative Investment Recommendation: The Liberty All-Star Growth Fund (ASG) is highlighted as a better investment option, offering a 9% dividend and a significant discount to NAV, outperforming BDCs in total return.
Upcoming Investment Opportunities: The author plans to release a "mini-portfolio for 2026" featuring four high-yield closed-end funds (CEFs) with an average yield of 9.2% and potential for over 20% price upside, encouraging readers to access this information.
Wall Street analysts forecast PSEC stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for PSEC is 2.50 USD with a low forecast of 2.50 USD and a high forecast of 2.50 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
1 Analyst Rating
Wall Street analysts forecast PSEC stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for PSEC is 2.50 USD with a low forecast of 2.50 USD and a high forecast of 2.50 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
0 Buy
0 Hold
1 Sell
Moderate Sell
Current: 2.950
Low
2.50
Averages
2.50
High
2.50
Current: 2.950
Low
2.50
Averages
2.50
High
2.50
Wells Fargo
Finian O'Shea
Underweight
downgrade
$3
Al Analysis
2025-08-28
Reason
Wells Fargo
Finian O'Shea
Price Target
$3
Al Analysis
2025-08-28
downgrade
Underweight
Reason
Wells Fargo analyst Finian O'Shea lowered the firm's price target on Prospect Capital to $2.50 from $3 and keeps an Underweight rating on the shares. The firm sees Prospect Capital's normalization in a constructive way, but also with still sharp NOI headwinds to navigate.
Wells Fargo
Finian O'Shea
Underweight
downgrade
$3
2025-05-12
Reason
Wells Fargo
Finian O'Shea
Price Target
$3
2025-05-12
downgrade
Underweight
Reason
Wells Fargo analyst Finian O'Shea lowered the firm's price target on Prospect Capital to $3 from $3.50 and keeps an Underweight rating on the shares. The firm notes the company declared its dividend through August, but at this point it only sees coverage through both a rebound in NAV and foregoing the income incentive fee.
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About PSEC
Prospect Capital Corporation is a business development company that focuses on lending to and investing in private businesses. Its investment objective is to generate both current income and long-term capital appreciation through debt and equity investments. It invests primarily in senior and subordinated secured debt and equity of private companies in need of capital for acquisitions, divestitures, growth, development, recapitalizations and other purposes. It invests primarily in first and second lien secured loans and unsecured debt, which in some cases includes an equity component. It invests in debt and equity positions of structured credit, which are a form of securitization in which the cash flows of a portfolio of loans are pooled and passed on to different classes of owners in various tranches. It may also acquire controlling interests in companies in conjunction with making secured debt investments in such companies. Its investment adviser is Prospect Capital Management L.P.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
