B. Riley Securities Upgrades Carlyle Secured Lending to Buy Following Q4 Earnings
B. Riley Securities upgraded Carlyle Secured Lending (NASDAQ: CGBD) from Neutral to Buy on Wednesday, setting a price target of $13.00 per share. The upgrade came shortly after CGBD reported its fourth quarter and full year 2025 financial results on February 24, 2026, despite the company missing analyst estimates on both earnings and revenue for the quarter.
Why the Rating Changed
The upgrade from B. Riley Securities was driven primarily by what the firm views as an attractive valuation for Carlyle Secured Lending following its Q4 earnings report. While the quarterly results fell short of expectations, the analyst team appears to have concluded that the stock’s current price presents a compelling entry point for investors.
Here’s the context surrounding the upgrade:
- Q4 earnings miss: CGBD reported adjusted earnings per share of $0.36 for Q4 2025, missing the analyst consensus estimate of $0.38 by approximately 4%. Total investment income came in at $66.9 million, also below the $68.0 million estimate. Overall, the company delivered earnings and revenue surprises of -12.23% and -9.03%, respectively, for the quarter ended December 2025.
- Significant discount to net asset value: Recent analysis noted that Carlyle Secured Lending trades at roughly a 30% discount to its net asset value (P/NAV), a substantial gap that likely factored into B. Riley’s view that the stock is undervalued at current levels.
- Earnings decline from prior year: The Q4 adjusted EPS of $0.36 represented a 23.4% decrease compared to the same period in the prior year, reflecting broader pressure on business development company (BDC) earnings as the interest rate environment has shifted.
- Upgrade despite the miss: The fact that B. Riley upgraded the stock immediately following a quarter where results missed estimates suggests the firm believes the negative news is already priced in and that the valuation discount more than compensates for near-term headwinds.
The $13.00 price target implies meaningful upside from recent trading levels, particularly when combined with the stock’s generous dividend yield. The company also declared a first quarter 2026 dividend of $0.40 per common share alongside its earnings release, signaling continued commitment to shareholder returns.
Dividend Profile: A 13.97% Yield for Income Investors
Carlyle Secured Lending remains one of the higher-yielding names in the BDC space. Key dividend details include:
- Annual dividend: $1.60 per share ($0.40 per quarter)
- Current dividend yield: 13.97%
- Most recent ex-dividend date: December 30, 2025
- Q1 2026 dividend declared: $0.40 per common share, maintaining the current quarterly payout level
The elevated yield is a function of both the company’s payout policy and its discounted stock price relative to NAV. For income-focused investors, the combination of a near-14% yield and a B. Riley Buy rating with a $13 price target may warrant a closer look. However, the recent earnings decline and misses on estimates suggest investors should carefully evaluate whether the current dividend level is sustainable if earnings pressure continues.
Other Analyst Perspectives
While B. Riley moved to a Buy rating, not all market observers share the same level of enthusiasm. Recent independent analysis titled “Time To Derisk BDC Holdings And Avoid Carlyle Secured Lending” maintained a neutral stance on CGBD, acknowledging the 30% P/NAV discount and approximately 15% yield alongside stable non-accruals, but expressing caution about the broader risk profile of BDC holdings in the current environment.
Disclaimer
This article is for informational purposes only and does not constitute financial advice. The content reflects publicly available analyst ratings and company data as of the publication date. Investors should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions. DivRank.com does not hold positions in any securities mentioned.