On Wednesday, RBC Capital adjusted its outlook on DigitalBridge Group Inc. (NYSE:DBRG), reducing the price target to $19 from $23, while maintaining an Outperform rating on the company's shares. The revision comes as the firm acknowledges a shift in DigitalBridge's financial landscape, including a decline in net internal rate of return (IRR) for certain investment vehicles and a total of $1.1 billion in new capital raised in the first quarter.
DigitalBridge's management has reaffirmed its 2024 guidance, anticipating $7 billion in new capital, balanced by expected realizations from DigitalBridge Partners I (DBP I) and DigitalBridge Partners II (DBP II). The first quarter traditionally sees lower capital raising activities, as many limited partners (LPs) are setting their allocation strategies for the year.
The company experienced a decrease in net IRR for its DBP-1/DBP-2 and Global Infrastructure Fund I (GIF-1), although there was an increase for the CoreSAF and credit strategy investments. These shifts in investment performance have influenced RBC Capital's reassessment of DigitalBridge's financial prospects.
During DigitalBridge's Investor Day, the company's management provided a financial outlook for 2028, projecting an average annual increase in fee-earning equity under management (FEEUM) ranging from $5.5 to $7.5 billion through the fiscal year 2028. This long-term guidance reflects the company's strategic plans and growth expectations.
RBC Capital's reduced price target to $19 is based on an updated model, which takes into account the latest developments in DigitalBridge's capital raising and investment performance. Despite the lowered target, the Outperform rating suggests that RBC Capital still sees potential in DigitalBridge's stock performance going forward.
InvestingPro Insights
As DigitalBridge Group Inc. (NYSE:DBRG) navigates through its financial shifts, current InvestingPro data provides a broader context for investors considering the company's stock. With a market capitalization of $2.63 billion and a P/E ratio that has adjusted to 23.4 in the last twelve months as of Q1 2024, the company's valuation is a point of interest. The robust revenue growth of 82.22% during the same period signals a significant increase in the company's topline, which may reassure investors about the company's growth trajectory.
However, it's important to note that despite the impressive revenue growth, the company's stock price has experienced volatility, as indicated by a 1-month price total return of -22.39% and a 3-month price total return of -31.3%. This could be a reflection of the market's reaction to the financial landscape changes mentioned by RBC Capital. For investors looking for additional insights, InvestingPro Tips highlight that DigitalBridge is trading at a low EBIT and EBITDA valuation multiple, which might suggest that the stock is undervalued relative to its earnings before interest and taxes, and earnings before interest, taxes, depreciation, and amortization.
For those considering a deeper analysis, there are 14 additional InvestingPro Tips available, which could provide further clarity on the company's financial health and stock performance. To access these insights, investors can use the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. With DigitalBridge's next earnings date on August 1, 2024, staying informed with real-time data and expert analysis could be crucial for making well-informed investment decisions.
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