On Monday, Piper Sandler confirmed its positive stance on shares of Apollo Global Management (NYSE:NYSE:APO), maintaining an Overweight rating and a $188.00 price target for the asset management firm's stock. The company, now valued at over $100 billion in market capitalization, has delivered an impressive 93% return year-to-date according to InvestingPro data.
Apollo was recently added to the S&P 500 index as a part of the quarterly rebalance, a change that will be effective from December 23. This inclusion is expected to result in the purchase of approximately 61 million shares, valued around $11 billion, which equates to roughly 10% of Apollo's market capitalization and represents about 16 days of average daily trading volume.
The analyst from Piper Sandler highlighted the historical outperformance of stocks added to the S&P 500, referencing the experiences of Blackstone (NYSE:BX) and KKR, although the latter is not covered by the analyst's firm. While past performance is not indicative of future results, these case studies suggest that Apollo's share price could see similar trends leading up to the effective date of its S&P 500 inclusion.
The addition of Apollo to the S&P 500 is perceived as a positive development and is seen as further evidence of the disruptive impact that financial sponsors have on the financials sector.
The analyst noted that Apollo's stock is currently trading at 18 times its projected 2026 earnings, which is lower compared to its peers like Blackstone at 28 times and KKR at 21 times. The expectation is that this valuation gap will narrow over time.
The strategic rationale behind Apollo's merger with Athene, which was completed in early 2022, included the potential for S&P 500 index inclusion. The analyst's reiteration of the Overweight rating and price target reflects a continued confidence in Apollo's performance and its positioning within the financial industry.
In other recent news, Apollo Global Management Inc. has made significant strides in renewable energy investments and financial performance. The company acquired a 50% interest in a portfolio of solar and battery energy storage systems in Texas from TotalEnergies (EPA:TTEF), marking a substantial investment in the renewable energy sector.
The deal includes approximately 2 gigawatts of assets, comprising three solar projects and two battery storage projects.
Apollo has also reported robust financial results, including record Fee Related Earnings (FRE) of $531 million, strong spread-related earnings (SRE) of $856 million, and an adjusted net income of $1.1 billion.
The company has been subject to numerous analyst actions, with TD Cowen maintaining a Buy rating on Apollo shares, BMO Capital Markets raising its price target from $138 to $157, and Keefe, Bruyette & Woods increasing Apollo's price target to $168.
These recent developments follow a series of positive analyst actions and affirm Apollo's strong position in the financial sector.
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