Ares Management Stock Price Target Increased Amid Market Growth
Ares Management Stock Target Elevated by Market Changes
CFRA, a renowned financial research organization, has raised its price target for Ares Management, L.P. (NYSE: ARES). The updated target is now $170.00, a notable increase from the previous target of $155.00. Ares Management is recognized as a leading global alternative investment manager, and this adjustment comes with a maintained Buy rating.
The increase in the price target is based on a hopeful outlook stemming from the growth of the total addressable market in private credit. In their findings, Ares Management noted that the private credit sector, valued at $1.3 trillion in recent years, is projected to reach $2.7 trillion by 2028.
This promising growth trend plays a vital role in CFRA’s decision, which utilizes a forward price-to-earnings (P/E) ratio of 28.8 times its 2025 earnings per share (EPS) estimates. This ratio is considerably higher when compared to both Ares's industry peers as well as its three-year historical average of 24.2 times.
The firm’s choice to uphold the Buy rating is further supported by Ares's strong performance in the second quarter of the current year. The company reported total assets under management (AUM) amounting to $447.2 billion, demonstrating an impressive 18% year-over-year increase. CFRA maintains its 2024 EPS estimate for Ares at $4.30, slightly exceeding the consensus expectation of $4.15, and projects an EPS of $5.90 for 2025 against a consensus of $5.78.
According to CFRA, Ares Management is well-positioned to take advantage of the ongoing shift towards private credit, as investors increasingly move away from traditional banking methods and public debt exposure.
The firm emphasizes that this transition is still in its formative stages and Ares, as a leading alternative investment manager, is equipped to benefit from this evolving landscape.
Insights reveal that around 92% of Ares's fundraising is derived from existing institutional investors, highlighting strong, enduring relationships with its clientele. Additionally, Ares is in a prime position to enhance its share of the private credit markets, particularly within the Asia and Europe regions.
Recent trends indicate a growth in loan sizes for direct lending, with mid-sized deals now reaching upwards of $500 million, while larger transactions involving partnerships surpass the $1 billion mark.
In recent developments, the National Football League (NFL) has allowed private equity firms to acquire up to 10% stakes in teams, ushering in significant collaborations, including commitments from Ares Management, among others, totaling a substantial $12 billion.
This shift in the NFL's traditional ownership model highlights evolving dynamics in sports investments. Furthermore, Ares Management is drawing attention from analysts, with Redburn-Atlantic initiating coverage on the company with a Neutral rating, while TD Cowen has lifted its price target from $158.00 to $162.00.
Also noteworthy is a recent acquisition by Automated Industrial Robotics Inc. (AIR) of Sewtec Automation, significantly financed by an investment from Ares Management's managed private equity fund. In another significant transaction, Hyatt Hotels Corporation has divested the Hyatt Regency Orlando and an adjacent land parcel for approximately $1.07 billion to RIDA Development Corporation alongside an Ares Management Real Estate fund.
Ares Management recently announced a third-quarter common dividend of $0.93 per share, representing a 21% increase from the prior year. They continue to report record high assets under management, amounting to $447 billion, also marking an 18% increase year-over-year.
Ares Management: A Beacon in the Investment Landscape
Ares Management's performance and strategic market position are vividly represented by real-time data, showcasing a robust market capitalization of $31.21 billion, indicative of its substantial standing in the investment management realm. Despite facing a relatively high P/E ratio of 78.94, the firm has consistently demonstrated its ability to sustain and grow dividends, marking four consecutive years of increases. This dedication to shareholder returns is compellingly illustrated by a dividend yield of 2.37%, supporting the interests of income-focused investors.
Furthermore, tips indicate that Ares is currently trading close to its 52-week peak, reflecting strong investor sentiment which aligns with CFRA’s upgraded price target. However, it is notable that 11 analysts have recently adjusted their earnings estimates downward, suggesting potential challenges or a recalibration of market expectations. Ares has delivered a remarkable return of 53.93% over the past year, showcasing its capacity to generate substantial investor gains, a trend expected to continue as the company navigates the expanding private credit sector.
Future Outlook for Ares Management
For those exploring deeper analyses, additional insights into Ares's financial health and market strategies are available, enhancing the understanding necessary for informed investment choices regarding the company's role within the private credit sector.
Frequently Asked Questions
What is Ares Management's new stock price target?
Ares Management's new stock price target is set at $170.00 according to CFRA.
How has Ares Management performed recently?
The company reported an 18% increase in total assets under management year-over-year, reaching $447.2 billion.
What market trends support Ares Management's growth?
The growth of the private credit market, expected to surge to $2.7 trillion by 2028, underpins Ares's positive outlook.
Have any analysts adjusted their ratings for Ares Management?
Yes, Redburn-Atlantic initiated coverage on Ares Management with a Neutral rating, while TD Cowen raised its price target from $158.00 to $162.00.
What was Ares Management's recent dividend announcement?
Ares Management announced a third-quarter dividend of $0.93 per share, a 21% increase from last year.
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