Main Street Capital (NYSE:MAIN) faced a setback, on track to snap its glowing 6-day winning streak.

After a steady ascent over 6 trading days, the business development company experienced a 1.11% decrease on Monday afternoon, landing at $45.31. The stock, which had previously surged by ~5%, reached a 52-week high of $45.91 on Friday, January 26th.

The stock is still maintaining an 11% lead over its 200-day simple moving average. Short interest on the stock is reported to be 4.44% of the total float.

Market Movement of Peers

Further exacerbating the scene, peers such as Ares Capital (ARCC), Golub Capital (GBDC), and Sixth Street Specialty Lending (TSLX) also observed a downturn on the same day as Main Street’s decline.

Next Steps for Main Street Capital

Main Street is set to unveil its Q4 earnings on Feb. 22. It’s projected that a near-record net investment income will be announced for Q4, with reports indicating that the BDC had originated new or increased commitments in its private loan portfolio during the quarter.

Market Ratings and Analysis

According to Seeking Alpha authors and the Quant Rating system, the stock has been awarded a Buy rating. However, sell-side analysts have a more cautious outlook, assigning it a Hold rating with an average price target of $44.50.

B. Riley analyst Bryce Rowe weighed in on the situation, expressing concerns about the impact of lower short-term rates on BDC earnings, particularly in the context of a faster pace of Fed rate cuts coinciding with deteriorating macro conditions.

Rowe’s assessment suggests limited upside for the group on a price-to-NAV basis.

Evaluating Debt Structure

SA author Roberts Berzins pointed out that the debt structure for MAIN could pose a potential problem.

Furthermore, in light of the current macroeconomic environment and prospective downward trends in short-term interest rates, contributor Samuel Smith expressed skepticism about MAIN’s trading premium amidst risks of recession.