Saratoga Investment (SAR) Stock Forecast & Price Target

Saratoga Investment is under pressure in F1Q27, posting a $0.42/share loss and a -7.1% ROE as $15.0M of net losses were driven mainly by $18.3M of unrealized depreciation in the core portfolio, partly offset by $3.2M of unrealized appreciation in the CLO and JV. Even so, the outlook remains constructive because it is expected to earn $1.00/share in F2027 and $1.88/share in F2028, supported by a $1.50/share spillover income cushion that can help fund the $3.00/share dividend. The positive view also reflects the ability to recover toward a 9% ROE, with fair value anchored by the portfolio’s income-generating middle-market lending strategy despite the $1.18/share NAV decline since 4Q26.

Saratoga Investment is facing weakening fundamentals as F1Q27 adjusted NII/share of $0.47 fell short of the $0.56 consensus and the $0.75 dividend was not covered by earnings, while NAV/share declined 4.9% to $23.23. Credit stress is also evident in $0.93 of unrealized depreciation, including $18.3M of markdowns in the non-CLO core portfolio, with Pepper Palace written off, Exigo still on accrual and carrying principal risk, and Chronus marked down. At the same time, net originations slowed to about $31M from $101M in F4Q26, portfolio yield slipped to 9.8%, and management’s lower-yielding funding mix and moderated deployment support weaker FY27 and FY28 NII expectations.