BMO sees Victory Capital shares as a top pick among asset managers with buyback potential in 2025

On Thursday, BMO Capital Markets updated its outlook on Victory Capital Holdings, Inc. (NASDAQ:VCTR), increasing the firm's price target to $78.00, up from the previous target of $71.00. The investment firm maintains an Outperform rating on the asset management company's stock. According to InvestingPro data, Victory Capital has demonstrated strong market performance, with a notable return of over 40% in the past six months.

The optimism towards Victory Capital is partly due to the anticipated benefits from the company's relationship with Amundi. BMO Capital highlights the revenue synergy potential following Victory Capital's partnership with the European asset management giant. This relationship is expected to contribute positively to Victory Capital's financial performance heading into 2025.

InvestingPro analysis reveals multiple positive indicators, including strong profitability metrics and solid financial health. Subscribers can access over 10 additional ProTips and comprehensive financial metrics through the platform's detailed research reports.

Victory Capital has distinguished itself from its competitors by achieving margin expansion, a feat it has maintained since 2021. The analyst attributes this success to Victory Capital's highly variable cost structure, which is comprised of revenue-sharing arrangements, vendor agreements, and significant employee ownership.

This structure stands in contrast to the approximate 35% variable cost ratio of its peers. InvestingPro data shows the company maintains a healthy gross profit margin of nearly 40%, demonstrating its operational efficiency.

Looking forward, 2025 is projected to be a year rich in catalysts for Victory Capital. These include improving net flows, further revenue synergies from the Amundi partnership, the potential for additional acquisitions, the possibility of resuming stock buybacks, and a reduction in the overhang from private equity ownership.

The analyst's selection of top asset manager picks for the approaching year includes Victory Capital, alongside other notable firms. This positive outlook reflects a confidence in Victory Capital's strategic initiatives and its ability to capitalize on market opportunities.

In other recent news, Apollo Global Management (NYSE:APO) has been making significant strides in the investment sector. Following the anticipated Federal Reserve rate cut, the private equity market, including firms like Apollo Global Management, is expected to benefit from favorable financing conditions for leveraged buyouts, according to Scott Merkle of SLB Capital Advisors.

In the meantime, Apollo Global Management has awarded its CFO, Martin Kelly, restricted stock units valued at $10 million, a strategic move to align executive compensation with the company's financial goals.

The company has also amended its insider trading policy to allow senior executives to engage in prepaid variable forward contracts involving the company's shares. This is seen as a way to provide liquidity to executives while potentially reducing market sales. CEO Marc Rowan has already filed his intention to enter into such contracts for 2,500,000 shares.

Apollo Global Management's stock has been upgraded by TD Cowen from $178.00 to $230.00 ahead of its inclusion in the S&P 500 Index. Piper Sandler has also maintained an Overweight rating for the company. Meanwhile, AppLovin (NASDAQ:APP), The Trade Desk Inc . (NASDAQ:TTD), and Coinbase (NASDAQ:COIN) experienced declines in their shares after not being included in the latest S&P 500 Index rebalance.

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