Oppenheimer analysts lowered their price target on Barings BDC, Inc. (NYSE:BBDC) to $10 from $11, noting they estimate the company’s current share price of $8.23 is pricing in $330 million (14.2% of its portfolio) of credit losses, which the analysts believe is too high.
In a recession, the analysts estimate losses could range from $156 million (6.7%) to $230 million (9.9%). The analysts suspect that investors are overestimating the loss because Barings does not publish its internal ratings on its portfolio.
The analysts raised their equity discount rate from 9.25% to 10.00% to reflect this greater level of uncertainty and risk, which resulted in a price target cut.