On Thursday, TD Cowen maintained its Hold rating on shares of Blue Owl Capital (NYSE: OWL), with a steady price target of $19.00. The firm's assessment follows the recent announcement of Blue Owl Capital's Atalaya Transaction, anticipated to be finalized in the second half of 2024. The transaction is expected to enhance the company's growth prospects across various distribution channels and contribute to its projected dividend target.
The firm updated its Distributable Earnings (DE) estimates for Blue Owl Capital for the years 2024 and 2025 to $0.78 and $0.97 respectively, a slight increase from the previous $0.96 estimate for 2025. The adjustment takes into account the implications of the Atalaya Transaction, which was publicly disclosed on July 16, 2024.
Blue Owl Capital's strategic move through the Atalaya Transaction is seen as a positive step by TD Cowen, potentially enabling the company to achieve its anticipated "$1.00 '25 dividend." This deal is set to provide Blue Owl Capital with additional avenues for growth, particularly in expanding its reach within different distribution networks.
Despite the strategic benefits of the Atalaya deal, TD Cowen has chosen to retain its Hold rating on Blue Owl Capital. The firm's decision reflects a cautious stance, possibly awaiting the actual closure of the transaction and its subsequent impact on the company's financial performance.
Investors are keeping a close eye on Blue Owl Capital as it navigates through this significant acquisition, which could shape the company's future earnings and distribution capabilities. The firm's current price target of $19.00 remains unchanged, indicating a wait-and-see approach to the stock's potential movement following the completion of the Atalaya Transaction.
In other recent news, Blue Owl Capital is set to acquire Atalaya Capital Management for $450 million, a strategic move projected to boost the company's financial performance starting in 2025. The acquisition is part of Blue Owl's ongoing expansion strategy, following recent acquisitions of Prima Capital Advisors and Kuvare Asset Management. The transaction is expected to be modestly accretive to Blue Owl's distributable earnings per share (EPS) in 2025.
Meanwhile, TD Cowen downgraded Blue Owl's stock from a "Buy" to a "Hold" rating due to concerns over earnings potential and dividend projections. Despite this, Piper Sandler, Citi, and Deutsche Bank (ETR:DBKGn) maintained positive ratings, with price targets ranging from $21.00 to $23.00.
In addition to these financial developments, Blue Owl Capital appointed Haitham Abdulkarim to lead its institutional business in the Middle East, indicating an expansion strategy in the region. These are all recent developments in the company's strategic moves and activities.
InvestingPro Insights
As Blue Owl Capital (NYSE: OWL) continues to make headlines with its Atalaya Transaction, InvestingPro data and tips provide a deeper dive into the company's financial health and future prospects. With a market capitalization of $26.79 billion USD, Blue Owl Capital demonstrates substantial size in its sector.
The company's P/E ratio stands at a high 133.45, which adjusts to a more reasonable 90.6 when considering the last twelve months as of Q1 2024. This adjustment is noteworthy given the company's revenue growth of 24.87% during the same period. Moreover, the firm's dividend yield is appealing at 3.83%, coupled with a robust dividend growth of 38.46%.
InvestingPro Tips highlight that Blue Owl Capital has raised its dividend for three consecutive years, indicating a commitment to returning value to shareholders. Additionally, the company is trading at a low P/E ratio relative to near-term earnings growth, which may attract value-oriented investors.
Analysts have mixed views, with some revising earnings downwards while others predict the company will be profitable this year. Notably, Blue Owl Capital has also experienced a significant return over the last week, with a 7.56% total price return, adding to a 62.46% return over the past year.
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