On Wednesday, Keefe, Bruyette & Woods (KBW) updated their outlook on Apollo Global Management (NYSE:APO), increasing the price target to $168.00 from $159.00. The firm maintained its Outperform rating on the asset management company's stock.
The price target adjustment follows Apollo Global Management's reported earnings, which surpassed expectations due to a combination of higher Fee Related Earnings (FRE), Strategic and Risk Earnings (SRE), and Principal Investment Income (PII). These gains were slightly offset by higher taxes. The analyst noted that within FRE, the earnings beat was primarily driven by increased management and capital solutions fees.
Apollo's gross inflows were also reported to be above analyst expectations. As a result of these positive financial outcomes, KBW has modestly raised their earnings estimates for Apollo, mainly attributing this decision to the higher management fees observed. However, there were no significant adjustments made to the SRE projections.
The new price target of $168 is based on a 17.5 times discounted 2026 After-tax Net Income (ANI) valuation. This revised target reflects the firm's confidence in Apollo's continued performance and financial growth potential. The Outperform rating suggests that KBW expects Apollo's stock to perform better than the average total return of the stocks the firm covers over the next six to 12 months.
InvestingPro Insights
Apollo Global Management's strong performance, as highlighted by KBW's increased price target, is further supported by real-time data from InvestingPro. The company's market capitalization stands at an impressive $93.15 billion, reflecting its significant presence in the financial services sector.
Apollo's P/E ratio of 17.28 aligns closely with KBW's valuation model, which uses a 17.5 times multiple for its price target calculation. This suggests that the market's current valuation is in line with analyst expectations. Additionally, the company's revenue growth of 20.81% over the last twelve months as of Q3 2024 underscores the strong financial performance noted in the earnings report.
InvestingPro Tips highlight Apollo's strengths, including its high shareholder yield and the fact that it's trading at a low P/E ratio relative to near-term earnings growth. These factors support KBW's Outperform rating and suggest potential for continued strong returns. The company's track record of maintaining dividend payments for 14 consecutive years also indicates financial stability and commitment to shareholder returns.
It's worth noting that InvestingPro offers 13 additional tips for Apollo Global Management, providing investors with a comprehensive analysis of the company's financial health and market position.
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