On Tuesday, Deutsche Bank (ETR:DBKGn) initiated coverage on Ares Management, L.P. (NYSE: NYSE:ARES) stock with a Buy rating and a price target of $176.00 for the shares.
The firm's analysis suggests that Ares Management is poised for significant growth in the coming years, projecting a compound annual growth rate (CAGR) of 22.4% for fee-related earnings (FRE) from 2023 to 2026.
The optimistic outlook is based on an expected approximate 18% growth in management fees, fee revenue, and fee-paying assets under management (AuM), which is anticipated to maintain stable fee rates.
Additionally, Deutsche Bank forecasts a consistent organic growth rate in gross fundraising of about 15-16% each year, coupled with a margin expansion of approximately 100-200 basis points.
The analyst from Deutsche Bank highlighted the attractiveness of Ares Management's high-growth and low-volatility earnings stream, which comprises roughly 80-90% of the company's earnings. This robust earnings foundation is anticipated to support a 20% annual growth in dividends for the firm's investors.
The price target of $176.00 reflects the firm's confidence in Ares Management's business model and its ability to deliver strong financial performance.
The Buy rating indicates that Deutsche Bank views Ares Management's stock as a favorable investment opportunity based on the company's growth potential and financial projections.
InvestingPro Insights
As Ares Management (NYSE: ARES) captures the attention of Deutsche Bank with a promising outlook, InvestingPro data and insights provide additional context for investors. Ares stands out with its impressive dividend track record, having raised its dividend for four consecutive years and maintained payments for eleven years. This consistency is a strong signal of the company's commitment to shareholder returns.
InvestingPro data reveals that Ares has a market capitalization of $45.24 billion, reflecting its significant presence in the industry. While the company's P/E ratio is high at 63.81, indicating a premium on its earnings, its PEG ratio of 0.66 suggests that its earnings growth could justify this valuation. Additionally, Ares has experienced a solid revenue growth of 11.8% over the last twelve months as of Q1 2024, which aligns with Deutsche Bank's growth projections.
Investors considering Ares Management can find more insights and tips on InvestingPro, including the fact that the company is trading at a high Price / Book multiple of 25.59. For those looking to delve deeper into Ares Management's financials and forecasts, InvestingPro offers additional tips, with a total of 14 InvestingPro Tips available for Ares Management. To access these insights, investors can use the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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