Gold prices steady ahead of Fed decision; weekly weakness noted
On Tuesday, Citizens JMP upgraded Ares Management, L.P. (NYSE:ARES) from Market Perform to Market Outperform, setting a price target of $165.00. The upgrade comes as the stock trades at $124.73, with analyst targets ranging from $142 to $217. According to InvestingPro, the company has maintained dividend payments for 12 consecutive years, showcasing its financial stability. The upgrade is based on Ares Management's substantial available capital and its position as a preferred lender in various market segments.
Ares Management currently has $133 billion in available capital, also known as dry powder, which is nearly 30% of the company's firmwide assets under management (AUM) and the highest in its peer group. This capital positions Ares as a go-to provider of credit solutions to a wide range of borrowers, from the lower middle market to the upper middle market.
Analysts at Citizens JMP forecast a significant increase in deployment activity for Ares in the upcoming quarters. They highlight that out of the $133 billion in dry powder, $81 billion will start generating fees once invested. This includes allocations in U.S. direct lending, European direct lending, alternative credit, and various other credit sectors.
The deployment of these funds is expected to contribute approximately $730 million in annual management fees, accounting for about 25% of the projected firmwide management fees for 2024. This potential for management fee growth is a key factor in the analyst's positive outlook for Ares Management's financial performance over the next year and beyond.
The updated price target of $165 reflects the optimism around Ares Management's ability to leverage its significant dry powder to generate increased fee revenue, thus potentially enhancing the company's earnings and shareholder value.
In other recent news, Ares Management reported a decline in fourth-quarter earnings per share (EPS), posting $1.23, which fell short of the analyst consensus estimate of $1.32. Despite this, the company achieved approximately $3.8 billion in new investment commitments and saw its portfolio investments at fair value rise to $26.72 billion. Ares Management also declared a first-quarter 2025 dividend of $0.48 per share, continuing its trend of stable or growing regular dividends for 15 consecutive years.
Additionally, ID.me secured a $275 million credit facility from Ares Management funds, with plans for a substantial equity investment. This financing aims to support ID.me's growth as it expands its digital identity verification services. Furthermore, Ares Management announced the closing of its Ares Capital Europe VI fund at €17.1 billion, surpassing its initial target and reinforcing its leadership in the global direct lending market.
The fund has already committed around €6.4 billion across more than 50 investments, focusing on European companies in defensive industries. These recent developments highlight Ares Management's continued expansion and strategic investments across various sectors.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.