Tuesday, Blue Owl Capital (NYSE:OWL) stock received an upgrade from UBS from Neutral to Buy, with a revised price target increased to $22.00 from the previous $18.00. The firm's resilience in fundraising, the successful listing of institutional private Business Development Companies (BDCs), and a promising start for the next GP Solutions vintage were cited as the primary reasons for the positive outlook.
The upgrade comes despite concerns over Blue Owl Capital's ability to meet its 2025 target of a $1.00 dividend, which would require a Distributable Earnings (DE) per share of $1.18, assuming an 85% payout ratio. UBS's estimate stands at a DE of $1.00 per share. Nevertheless, the firm's direct lending, GP Solutions, and real estate segments are deemed to be in strong positions.
UBS's projections for Blue Owl Capital's Distributable Earnings in 2026 are 3.5% higher than the consensus. The analyst also anticipates that the company will achieve a Fee-Related Earnings Compound Annual Growth Rate (FRE CAGR) of 24%, which surpasses the average of its peers, estimated at 20%.
InvestingPro Insights
Following UBS's upgrade of Blue Owl Capital, a look at the real-time data from InvestingPro shows a company with a strong performance and promising indicators. With a market capitalization of $20.64 billion, Blue Owl Capital is trading at a high Price / Book multiple of 13.51, which may reflect the market's confidence in the company's assets and growth potential. The company's gross profit margin stands at an impressive 60.1%, showcasing its ability to manage costs and maintain profitability.
InvestingPro Tips highlight that Blue Owl Capital has successfully raised its dividend for three consecutive years, signaling a commitment to returning value to shareholders. Additionally, the company is trading near its 52-week high, with its price at 96.97% of this peak, which may attract investors looking for firms with strong momentum. Furthermore, with analysts predicting that the company will be profitable this year, there is an optimistic outlook on its financial performance.
For those considering an investment in Blue Owl Capital, there are more insights available. InvestingPro offers additional tips to help investors make informed decisions. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription for more in-depth analysis and data. Currently, there are 13 additional InvestingPro Tips available for Blue Owl Capital, providing a comprehensive look at the company's financial health and prospects.
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