Truist Financial Maintains Buy Rating on Pennantpark $ (PFLT)

Truist Financial analyst Arren Cyganovich maintains a Buy rating on Pennantpark $. The analyst has a 5-star rating with a 20.3% average return and 68.91% success rate. The company has a Moderate Buy consensus with a price target of $10.96. Pennantpark $ has a one-year high of $11.90 and a one-year low of $8.82, with an average volume of 794.1K.

PennantPark Floating Rate Capital (PFLT) reported its Q3 2025 earnings, showcasing robust growth and a strategic focus on dividend coverage. CEO Arthur Howard Penn emphasized an uptick in deal activity, leading to increased loan originations in the second half of 2025. The company's portfolio grew to $2.4 billion, up from $2.3 billion in the previous quarter, with $208 million invested in new and existing portfolio companies at a weighted average yield of 10.1%.

A notable development was the formation of a new joint venture with Hamilton Lane, committing a combined total of $500 million. The company anticipates beginning to invest this capital by the end of September or early October. This move underscores PFLT's commitment to providing strategic capital solutions to portfolio companies executing growth plans.

Penn highlighted the attractive risk profile of core middle market loans, where leverage is lower and spreads are higher than in the upper middle market. The company's NAV stood at $10.96 per share, down 1% from the previous quarter, reflecting a disciplined approach to capital preservation.

The earnings call also addressed the company's outlook for the remainder of the year. Penn expressed optimism about continued NII growth and full dividend coverage, driven by increasing leverage to the target 1.5x level, completing the PSSL 1 joint venture, and ramping up the new Hamilton Lane JV over 12-18 months.

The company's financial results showed GAAP net investment income of $0.25 per share and core net investment income of $0.27 per share for the quarter ended June 30. Operating expenses were $25.4 million in interest and expenses on debt, $11.3 million in base management and performance-based incentive fees, $1.95 million in general and administrative expenses, and $0.2 million in provision for taxes. The net realized and unrealized change on investments, including provision for taxes, was a loss of $5.3 million.

PennantPark's portfolio metrics included a weighted average yield on debt investments of 10.4%, 90% in first lien senior secured debt, and a debt-to-equity ratio of 1.3x as of June 30. Nonaccruals were limited to 1% of the portfolio at cost and 0.5% at market value, with the portfolio diversified across 155 companies and 50 industries.

Analysts' tone was generally constructive, focusing on deployment pace, dividend coverage, and the impact of new ventures. Management maintained a confident and slightly optimistic tone, emphasizing operational strength, prudent underwriting, and partnership potential. The rebound in deal activity and portfolio growth, along with prudent balance sheet management, support a more optimistic outlook for the remainder of the year.

Reference List:
[1] https://seekingalpha.com/news/4483988-pflt-anticipates-full-dividend-coverage-as-new-500m-hamilton-lane-jv-ramps-up
[2] https://www.marketbeat.com/instant-alerts/main-street-capital-nysemain-stock-price-expected-to-rise-truist-financial-analyst-says-2025-08-11/