STOCKS | UBS Upgrades Morgan Stanley Direct Lending to Buy, Cuts Price Target to $14.50

On November 10, UBS upgraded Morgan Stanley Direct Lending (MSDL) to Buy from Neutral but lowered its price target to $14.50 from $15.50. According to Sina Finance, UBS said MSDL's net asset value fell 3.8% quarter over quarter in the third quarter, weighed down by weaker performance from some credit assets, but expected management fee cuts, higher interest rates and expansion of its joint venture business to support future net investment income growth. UBS said MSDL plans to cut its base management fee from 1.00% to 0.75% and its incentive fee from 17.5% to 15% starting in the first quarter of 2027; based on the past 12 months, the changes are expected to add about $0.13 to annual net investment income per share, or about $0.03 per quarter, while a 25-basis-point rate increase is expected to add about $0.02 per share each quarter. UBS also expects the Capstone joint venture to contribute an additional $0.03 to $0.05 in net investment income per share each quarter once it reaches full operating scale in mid-2027.