Partners Group's Stock Boost: UBS Upgrades to Buy Rating

Partners Group Sees Significant Share Price Increase

Shares of Partners Group (SIX: PGHN) saw a notable increase exceeding 4% following a positive upgrade from UBS Global Research. The research firm raised its rating on the stock to 'buy', citing a wealth of optimistic factors surrounding the company's current and future performance.

UBS Analysts Highlight Growth Potential

The team of analysts at UBS has expressed confidence in Partners Group's compelling growth prospects, particularly in assets under management (AuM). They anticipate a remarkable compound annual growth rate of 13% in AuM from 2024 through 2027, positioning Partners Group to outperform many of its European counterparts, while also aligning closely with growth trends observed in U.S. institutions.

Innovative Distribution Model

The expected growth is significantly attributed to Partners Group’s innovative distribution approach, which blends institutional partnerships along with wealth management channels. A notable collaboration involves BlackRock, focusing on model portfolios available to U.S. wealth management clients.

UBS believes this strategic partnership will ensure consistent and predictable growth in AuM for Partners Group as market dynamics evolve.

Positive Earnings Forecast

Additionally, UBS raised its earnings per share projections for the upcoming years—2024, 2025, and 2026—with increases of 2-3% from prior estimates. These adjustments reflect stronger performance fees, driven by an improving market outlook for U.S. capital markets and a promising pipeline for asset exits from previous years.

Resilient Valuation Amid Positive Trends

Despite the optimistic earnings projections, UBS noted that the valuation of Partners Group remains consistent with long-term averages. However, the firm’s solid margins, robust positioning within private markets, and engagement in enduring growth trends suggest potential for notable outperformance in both the medium and long term.

Operational Growth and Market Confidence

Moreover, UBS highlighted that Partners Group maintains a focused approach to operational growth, targeting a substantial EBIT margin of 60% from new business avenues, all while continuing to effectively build out its platform.

While uncertainty persists regarding the resurgence of transaction activity in private markets, UBS’s analysts remain steadfast in their belief that the differentiated model of Partners Group will allow the firm to navigate challenges more effectively than its competitors.

Increasing Revenue from Performance Fees

Currently, UBS anticipates that performance fees will represent between 20% and 30% of total revenue for Partners Group in 2024, with projections suggesting this figure will surpass 30% by 2026 as market conditions normalize. This perspective underlines the firm’s strategic capability to adapt and thrive amid changing market environments.

Price Target Increase Signals Analyst Confidence

In response to these favorable forecasts, UBS has also modified its price target for Partners Group's stock, raising it to CHF1,378 from a previous target of CHF1,174. This adjustment not only reflects enhanced investor confidence but also underscores the firm’s potential to deliver considerable value amidst macroeconomic headwinds.

Frequently Asked Questions

What led to the recent surge in Partners Group shares?

The shares surged following an upgrade from UBS, which raised its rating to 'buy', citing strong growth potential and operational strategies.

What is the expected growth rate for Partners Group's assets?

UBS analysts forecast a 13% annual growth rate in assets under management between 2024 and 2027.

How does Partners Group's distribution model contribute to growth?

Its innovative model combines institutional partnerships with wealth management, helping ensure consistent revenue streams.

What are the revised earnings projections for Partners Group?

UBS increased the earnings per share projections for 2024, 2025, and 2026 by 2-3% due to expected stronger performance fees.

What is the new price target set by UBS for Partners Group?

The new price target is CHF1,378, reflecting increased confidence in the company's long-term growth capabilities.

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