Citi upgrades Carlyle Group stock to Buy on improved fundraising outlook

Investing.com - Citi upgraded The Carlyle Group (NASDAQ:CG) from Neutral to Buy on Thursday, while significantly raising its price target to $65.00 from $44.00, citing an improved fundraising outlook across multiple business segments. The alternative asset manager, currently trading at $56.87 with a market capitalization of $20.54 billion, has demonstrated strong momentum with a 41.14% return over the past year and maintains a "GOOD" Financial Health Score according to InvestingPro analysis.

The upgrade reflects increasing momentum in Carlyle’s credit, insurance, private wealth, and AlpInvest (investment solutions) businesses, according to the research firm. Citi sees potential for Carlyle to exceed management’s approximately $40 billion fundraising target for 2025 and the 6% fee-related earnings growth guidance for the same year.

Citi noted that guidance could potentially be raised during Carlyle’s second-quarter earnings call, and highlighted an improving capital markets backdrop that should benefit the firm’s largest business, private equity, with expectations for improved trajectory in 2026 and 2027.

The investment bank pointed out that Carlyle currently trades at 11.6x and 10.5x its 2026 and 2027 earnings per share estimates, making it the cheapest name among Citi’s alternative asset manager coverage. This represents approximately a 46% discount to the average value of alternative asset managers in Citi’s coverage universe.

Given the positive momentum and improving backdrop for transactional activity, Citi believes this discount is excessive and sees an attractive risk/reward opportunity, with the new $65 price target implying 14x and 12x the firm’s 2026 and 2027 after-tax distributable earnings estimates.

In other recent news, The Carlyle Group reported record financial results for the first quarter of 2025, with fee-related earnings reaching $311 million, a 17% increase year-over-year, and assets under management hitting a new high of $453 billion. The firm also announced a strategic partnership with Diversified Energy to invest up to $2 billion in natural gas and oil assets across the United States. Analysts at CFRA upgraded their price target for Carlyle Group to $58, citing early signs of recovery in private equity monetization. Goldman Sachs maintained a Buy rating with a $51.75 target, expressing optimism about Carlyle’s growth prospects in areas like Retail, Secondaries, and Credit. Keefe, Bruyette & Woods also raised their price target to $45, following Carlyle’s earnings report that surpassed expectations by $0.18. These developments highlight Carlyle’s strategic initiatives and robust financial performance, despite ongoing market uncertainties.

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