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On Monday, Barclays (LON:BARC) initiated coverage on Blue Owl Capital Inc. (NYSE: OWL), assigning the investment management firm an Overweight rating and setting a price target of $29.00 per share. Currently trading at $22.13, the stock has shown strong momentum with a 29% gain over the past six months, according to InvestingPro data. The new rating reflects Barclays’ positive outlook on the company’s prospects in the financial industry. InvestingPro analysis indicates the company maintains a "GOOD" overall financial health score.
Blue Owl Capital is recognized for its strong position in several large total addressable market (TAM) areas such as private credit and private wealth management. The company has demonstrated impressive growth with revenue increasing 32.6% in the last twelve months to $2.3 billion. Barclays highlighted the company’s industry leadership, particularly in asset classes like GP stakes and triple net lease. The firm’s recent mergers and acquisitions are seen as paving the way for future growth opportunities in sectors like insurance solutions, digital infrastructure, and alternative credit.
Barclays also pointed out the resilience of Blue Owl Capital’s business model. The company’s reliance on permanent capital is believed to offer protection against potential downturns, ensuring stability in financial performance even if the anticipated recovery in transaction activities faces delays.
The investment firm’s stock valuation presents an interesting case, according to Barclays. The stock currently trades at a P/E ratio of 110.1x and maintains a healthy dividend yield of 3.25%, having raised its dividend for four consecutive years. While the shares are currently trading at a price that seems only modestly inexpensive or in line with the market on an all-in distributable earnings (DE) per share basis, Barclays finds the valuation much more compelling when considering the shares on a fundamental fee-related earnings (FRE) multiple basis. Fee-related earnings make up the majority of Blue Owl Capital’s earnings, which supports the favorable rating.
The Overweight rating implies that Barclays expects Blue Owl Capital’s stock performance to outpace the average return of the stocks the analyst covers over the next twelve months. The $29.00 price target suggests a potential upside from the company’s current trading price. For deeper insights into Blue Owl Capital’s valuation and growth prospects, including 12 additional ProTips and comprehensive financial analysis, visit InvestingPro to access the full Pro Research Report.
In other recent news, Blue Owl Capital has seen significant developments that are drawing attention from investors. The company reported fourth-quarter results, revealing Distributable Earnings per share of $0.21, slightly below Bloomberg’s consensus expectation of $0.22. Despite this, Blue Owl achieved a record quarter in capital raising, with $9.5 billion in equity commitments and $4.3 billion in the credit segment. Analysts at TD Cowen have raised their price target for Blue Owl from $28.00 to $30.00, maintaining a Buy rating, and highlighting strong performances in Digital Infrastructure and Global Wealth Management as key factors.
JMP Securities has also increased its price target for Blue Owl to $32.00, reiterating a Market Outperform rating and emphasizing the company’s potential for substantial growth. The firm noted Blue Owl’s predictable revenue streams, with about 90% derived from permanent capital. Meanwhile, JPMorgan maintained a Neutral rating with a $23.00 price target, acknowledging the company’s robust fundraising activities and potential for significant growth in 2025.
Additionally, Blue Owl has entered into a forward flow agreement with Pagaya (NASDAQ:PGY) Technologies, which will allow Pagaya to sell up to $2.4 billion in consumer loans through Blue Owl Managed Funds. This partnership underscores Blue Owl’s strategic efforts to expand its market reach and capitalize on growth opportunities. The company continues to focus on integrating recent acquisitions and scaling its operations, bolstering confidence in its financial prospects.
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