Morgan Stanley Direct Lending Fund Soars 5.4%: Is Further Upside Left in the Stock?

Morgan Stanley Direct Lending Fund MSDL shares rallied 5.4% in the last trading session to close at $24.13. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 3% gain over the past four weeks.

With the Federal Reserve expected to cut the rate once later this year, the financial services companies are in the spotlight. Hence, Morgan Stanley Direct Lending Fund is likely to see an increase in demand for loans from its portfolio companies and new entities as they realize higher rates are here to stay for longer. Thus, this drove the MSDL stock higher.

This company is expected to post quarterly earnings of $0.63 per share in its upcoming report, which represents a year-over-year change of -6%. Revenues are expected to be $101.6 million, up 14.3% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Morgan Stanley Direct Lending Fund, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on MSDL going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold).

Morgan Stanley Direct Lending Fund belongs to the Zacks Financial - SBIC & Commercial Industry industry. Another stock from the same industry, Golub Capital BDC GBDC, closed the last trading session 0.4% lower at $15.52. Over the past month, GBDC has returned -3.3%.

Golub Capital BDC's consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.49. Compared to the company's year-ago EPS, this represents a change of +11.4%. Golub Capital BDC currently boasts a Zacks Rank of #2 (Buy).

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