CFRA sets Blue Owl stock Buy rating, $27 target

On Thursday, CFRA analyst Kenneth Leon initiated coverage on Blue Owl Capital (NYSE: OWL) with a Buy rating and set a price target of $27.00. Leon highlighted the company’s solid growth rate expectations and its valuation relative to historical averages and peers in the alternative investment space. According to InvestingPro data, analysts’ price targets for Blue Owl range from $17 to $32, with the current stock price at $20.40 suggesting potential upside based on the consensus target.

Leon’s valuation is based on a forward price-to-earnings (P/E) ratio of 30.0 times and a total enterprise value (TEV) to EBITDA multiple of 10.9 times. These figures are below the three-year historic averages for Blue Owl, which stood at 21.0 times for P/E and 17.1 times for TEV/EBITDA. The analyst noted that Blue Owl’s closest alternative (ALT) peer, ARES Management (ARES), trades at a P/E of 28.3 times and a TEV/EBITDA of 20.0 times. InvestingPro analysis indicates the stock is currently trading at a P/E ratio of 102.7x and an EV/EBITDA of 17.83x, suggesting premium valuations. For deeper insights into Blue Owl’s valuation metrics and peer comparison, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

The coverage comes with an optimistic view of Blue Owl’s financial future, with earnings projections of $0.90 per share in 2025 and $1.10 in 2026. Revenue is expected to reach $2.8 billion in 2025 and $3.4 billion in 2026. Leon expressed confidence in the company’s ability to deliver 20%-25% revenue growth, excluding any potential future acquisitions. This outlook aligns with the company’s strong track record, as InvestingPro data shows impressive revenue growth of 32.56% in the last twelve months, with current revenue at $2.29 billion and a healthy gross profit margin of 59.91%.

The analyst also provided insights into Blue Owl’s earnings before interest, taxes, depreciation, and amortization (EBITDA), forecasting growth to $1.6 billion in 2025 and $1.95 billion in 2026. This outlook is supported by Blue Owl’s track record of growing fee-related earnings by 25% annually since its public debut in May 2021. Current EBITDA stands at $1.05 billion, according to InvestingPro, which also highlights the company’s strong financial health with an overall score of "GREAT" and a current ratio of 1.79, indicating solid liquidity.

Leon’s report detailed Blue Owl’s strong performance in 2024, with assets under management (AUM) reaching $251.1 billion, marking a 52% year-over-year increase. Fee-paying AUM grew by 47% to $159.8 billion. Additionally, the company has $22.6 billion in AUM not yet generating fees, which is expected to contribute over $300 million in management fees once fully deployed.

The analyst concluded by mentioning Blue Owl’s product segment mix at the end of 2024, which included Credit (54% of total AUM), GP Strategic Capital (26%), and Real Assets (20%). Furthermore, Blue Owl is developing a new alternative credit product aimed at wealth and institutional markets.

In other recent news, Blue Owl Capital Inc. has made several significant announcements. The firm reported a change in senior management with the resignation of Sean Ward from his role as Senior Managing Director and Board member, a move confirmed in a regulatory filing that is stated to be unrelated to the company’s operations or financial controls. Additionally, Blue Owl Capital appointed Rosamond Price as Managing Director and Head of Private Wealth for Europe, the Middle East, and Africa, signaling a strategic focus on expanding its private wealth business in that region. In another leadership update, Blake Shorthouse joined as the Global Head of Family Capital, bringing extensive experience to the role and aiming to strengthen relationships with Family Offices.

In terms of market analysis, Barclays (LON:BARC) initiated coverage on Blue Owl Capital with an Overweight rating and a price target of $29 per share, reflecting a positive outlook on the firm’s prospects and its strong position in private credit and wealth management. The company is noted for its leadership in asset classes like GP stakes and triple net lease. Meanwhile, Wingspire Equipment Finance, backed by Blue Owl Capital, provided a $30 million capital lease to an IT managed service provider, illustrating Blue Owl’s continued investment in digital infrastructure.

These developments reflect Blue Owl Capital’s strategic efforts to enhance its leadership team and expand its influence in key financial markets. The company’s ongoing commitment to innovation and growth is underscored by these recent appointments and financial maneuvers. Investors will likely be watching closely to see how these changes impact the firm’s trajectory in the coming months.

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