Brookfield Asset Management stock rating downgraded by BofA Securities

Investing.com - BofA Securities downgraded Brookfield Asset Management (NYSE:BAM) from Buy to Neutral, setting a price target of $68.00. The company, with a market capitalization of $93.5 billion, has seen its stock surge 49% over the past year.

The downgrade reflects BofA’s assessment that Brookfield is "not best-positioned for US retail and 401k secular themes" and concerns about the company’s "current premium valuation" which exceeds one standard deviation above normal levels. According to InvestingPro data, BAM trades at a P/E ratio of 39x, with revenue growing at 13.8% year-over-year.

BofA Securities also cited Brookfield’s increased capital intensity and the unlikelihood of the company being added to the S&P 500 index in the near term as additional factors behind the rating change.

Despite the downgrade, BofA remains positive on alternative investments broadly and specifically noted that Brookfield "has the #1 infrastructure business in the world which will be one of the fastest growing Alt segments over the next 10 years." InvestingPro analysis shows the company maintains a GOOD financial health score, with additional insights available in the comprehensive Pro Research Report.

The firm identified potential downside risks including that Brookfield’s listed vehicles could weigh on fee-related earnings and concerns about real estate investment performance given the company’s allocations to commercial real estate office and retail sectors. The company maintains a healthy gross profit margin of 71% and a strong return on assets of 15.2%.

In other recent news, Brookfield Asset Management reported a strong second quarter for 2025, highlighting significant growth in fee-related and distributable earnings. This performance reflects the company’s ongoing success in capitalizing on market trends in AI infrastructure and renewable energy. Additionally, BMO Capital adjusted its price target for Brookfield Asset Management, raising it to $56 from $53 while maintaining a Market Perform rating. The firm cited positive fundamentals, including double-digit growth in fee-bearing capital and stable fee rates and margins. In a separate development, David Levi, an executive from Brookfield, met with China’s vice commerce minister Ling Ji. During the meeting, China expressed its interest in welcoming Brookfield to establish renewable energy funds and make long-term investments in the country. These recent developments underscore Brookfield’s strategic focus on expanding its global presence and leveraging growth opportunities in key sectors.

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