On Wednesday, UBS reaffirmed its confidence in Ares Management, L.P. (NYSE:ARES), maintaining a Buy rating with a consistent price target of $160.00.
During Ares' investor day, the company's growth prospects were showcased, emphasizing its dominance in private credit, the valuable wealth management channel, and strategic acquisitions in areas such as real estate and secondary.
Ares Management set new five-year targets, aiming for 18% growth in fee-related earnings (FRE) and 23% growth in realized income (RI), which are slightly below the consensus expectations of 23% and 25%, respectively.
Despite the targets being under the consensus, UBS suggests that the company's history of conservative guidance could imply that actual performance may surpass these goals. In 2021, Ares Management projected a 20% growth in FRE, yet achieved a significant 33%, indicating a pattern of setting achievable benchmarks.
The firm's progress in key growth areas was also noted, reinforcing the belief that the set targets are more of a low bar rather than an indicator of a potential slowdown.
On the day of the investor event, Ares Management's stock performance initially fell behind its peers, which could be attributed to high expectations leading up to the event. However, the stock's recovery towards the market close was seen as a positive sign. This pattern of stock behavior was likened to that of KKR & Co. Inc., which experienced similar market movements surrounding its investor day.
UBS's stance remains positive on Ares Management, suggesting that the investment firm's established track record and strategic growth initiatives position it well for future performance. The price target of $160 reflects this optimism and anticipates the company's continued success in its operations and financial goals.
InvestingPro Insights
As Ares Management (NYSE:ARES) continues to chart its course for growth, the latest data and insights from InvestingPro shed light on the firm's financial health and market position. With a robust market capitalization of $44.5 billion, Ares stands out in the investment management sector. Its forward-looking P/E ratio, as of the last twelve months leading up to Q1 2024, stands at 76.96, which suggests investors are anticipating higher earnings in the future. This is further supported by the company's revenue growth of 11.8% over the same period, reflecting its ability to expand its business.
InvestingPro Tips highlight two notable aspects of Ares Management's financial dynamics. Firstly, the firm has demonstrated a commitment to shareholder returns, raising its dividend for 4 consecutive years and maintaining dividend payments for 11 consecutive years. Secondly, despite some analysts revising their earnings expectations downwards for the upcoming period, Ares has been trading at a low P/E ratio relative to near-term earnings growth, which could indicate a potential undervaluation by the market.
For investors looking for comprehensive analysis and additional insights, there are over 12 InvestingPro Tips available, which can be accessed by visiting https://www.investing.com/pro/ARES. To delve deeper and make informed investment decisions, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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