Apollo Global Management Inc. (NYSE: APO) is one of the top alternative asset managers for investors. The firm has just released its 5-year financial plan to capitalize on an already impressive 24% annualized return since its 2011 IPO. Is it possible for a strategic investment in fresh gains in private equity and alternative asset management to also become a secular theme that should carry on for many years into the future?
The private equity and asset management firm is now targeting $10 billion in annual earnings and doubling its assets to about $1.5 trillion under management by scaling private equity over the 5-years period.
The backdrop comes at a time when the Federal Reserve has just begun its interest rate cutting campaign. It’s also at a time when China is stimulating its economy for banks and property. Other central banks are expected to cut interest rates ahead as well. All of this, particularly lower interest rates, will combine into a scenario that is beneficial for private equity.
With this in mind, should investors chase Apollo Global Management shares higher? The stock has recently hit a 52-week high and all-time high of $135. Looking for an additional gain will either be chasing gains or will be following other calls for strategic gains.
Oggonomics never uses any single analyst view as a reason to buy or sell any investment. The real issue in this case, on the other hand, is what to do when multiple firms are sticking with their positive ratings while also raising their price targets. Multiple firms are chasing Apollo Global Management with higher and higher targets.
DETAILED VIEWS…
Apollo Global Management was reiterated with an Outperform rating and its price target was raised to $138 from $123 at BMO Capital Markets. This call noted that Apollo’s targets for originations appear conservative and that the valuations are low enough with growth and sustainable expectations ahead.
BofA Securities had already upgraded Apollo to Buy in August and it now raised its price objective to $143 from $123 in that call. BofA’s view is that Apollo offers very attractive price/growth ratios on top of a long-terms earnings growth in the 15% to 20% range. Most historic profits have come from its retirement business, but BofA like its asset management business and getting deeper into private wealth.
TD Cowen reiterated its Buy rating on Apollo and raised its price target to $162 from $135 in the call. The post-guidance call is treating Apollo’s outlook as more of a floor than a ceiling, and TD Cowen also sees a re-rating likely to support that higher target.
Wells Fargo reiterated its Overweight rating and raised its price target to $148 from $132. The Wells Fargo report talked up support for ongoing multiple expansion (re-rating) and sees earnings and momentum carrying on.
AND MORE…
Two other analyst reports talked up the ratings and the price targets:
Evercore ISI reiterated its Outperform rating and its price target up to $150 from $127 at BMO Capital Markets.
JPMorgan reiterated its Overweight rating and raised its target to $143 from $129.
WARNING/DISCLAIMER
All of the analyst ratings and price targets have been taken from the outside firms named above. All ratings, targets and opinions provided are not necessarily the same as Oggonomics sees, and Oggonomics has no formal ratings nor price targets on Apollo.
Any decision to buy or sell any securities in Apollo or in related companies is up to each individual investor. Those decisions should also be made along with the assistance of a financial advisor.
