Tuesday, on the heels of DigitalBridge Group Inc.'s (NYSE:DBRG) fourth-quarter results, Truist Securities has increased the company's share price target from $20.00 to $22.00, while reiterating a Buy rating. The revision follows a detailed analysis of the company's financial prospects.
The firm's expectations for DigitalBridge's future earnings are optimistic, with forecasts of $156 million in Fee-Related Earnings (FRE) and Adjusted EBITDA for 2024, and an even stronger $200 million for 2025.
These projections are based on several key assumptions, including a growth in Investment Management Fee-Earning Unrealized AUM (IM FEEUM) to $37 billion by the end of 2024 and $45 billion by the end of 2025, alongside $351 million in fee revenue.
The rationale behind the price target adjustment lies in the Discounted Cash Flow (DCF) analysis conducted by Truist Securities. The DCF valuation of $25.77 per share is calculated using a 9.9% discount rate, paired with a near-term 20x FRE target multiple. This new price target suggests a total return potential of approximately 19%.
The price target enhancement reflects confidence in DigitalBridge's ability to generate significant fee revenue and expand its asset management scale. The company's strategic direction and financial health appear to be on a positive trajectory, as evidenced by the upward adjustment in the stock's price target and the maintained Buy rating.
InvestingPro Insights
In light of Truist Securities' updated price target for DigitalBridge Group Inc. (NYSE:DBRG), current InvestingPro data and tips provide additional context for investors seeking to understand the company's market position. DigitalBridge is trading at a low EBIT valuation multiple, which may indicate an attractive entry point for value investors. Moreover, analysts predict the company will be profitable this year, with a return on assets of 0.62% for the last twelve months as of Q1 2023.
The company's market capitalization stands at $3.2 billion, and despite a negative adjusted P/E ratio for the last twelve months as of Q1 2023, the forward-looking PEG ratio is a mere 0.05, suggesting potential for growth relative to earnings expectations. Additionally, DigitalBridge has demonstrated a robust gross profit margin of 100% over the same period, with an operating income margin of 37.98%, reflecting efficient management and strong profitability metrics.
Investors interested in deeper analysis can explore more InvestingPro Tips, which include insights on the company's revenue valuation multiple and debt levels. With 11 additional tips available on InvestingPro, potential subscribers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. This comprehensive analysis may prove invaluable for those considering an investment in DigitalBridge Group Inc. as they weigh the company's future prospects against market performance indicators.
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