Goldman Sachs upgrades Affiliated Managers Group stock on growth outlook

Investing.com - Goldman Sachs upgraded Affiliated Managers Group (NYSE:AMG) from Neutral to Buy on Thursday, setting a price target of $218.00, which represents a 17% upside potential from current levels. The stock, currently trading near its 52-week high of $199.52, has shown strong momentum with a 21% return over the past year. According to InvestingPro analysis, AMG appears undervalued based on its Fair Value metrics.

The upgrade comes as Goldman Sachs anticipates an inflection in organic base fee growth for AMG, driven by accelerating flows across the AQR platform, continued momentum in private markets affiliates, and a modest reduction in long-only equity outflows. InvestingPro data reveals that management has been actively buying back shares, while three analysts have recently revised their earnings estimates upward, supporting the positive outlook.

Goldman Sachs projects 7% annual core EBITDA growth for AMG in 2026 and 2027, with additional upside from performance fees potentially driving high-single-digit total EBITDA growth as the company continues shifting toward alternative affiliates.

The investment bank’s $218 price target is based on a 7.5X EV/EBITDA multiple or 7.5X Q5-Q8 P/E, which aligns with AMG’s historical valuation and its current trading multiple.

Goldman Sachs has revised its earnings per share estimates for AMG to $24.04 for 2025, $27.81 for 2026, and $32.34 for 2027, placing its 2026 and 2027 projections approximately 7% above consensus estimates.

In other recent news, Affiliated Managers Group, Inc. (AMG) has appointed Thomas M. Wojcik as its new President, while he continues to serve as Chief Operating Officer. Wojcik’s leadership has been noted for contributing to significant growth in private markets and liquid alternative strategies, which now constitute half of AMG’s earnings. Additionally, AMG has entered into an agreement to acquire a minority equity interest in Verition Fund Management LLC, a multi-strategy investment firm managing approximately $12.6 billion in assets. This strategic acquisition is expected to close in the second quarter of 2025 and aligns with AMG’s partnership approach, enhancing its exposure to alternative strategies.

TD Cowen has raised its price target for AMG to $196.00, maintaining a "Hold" rating on the stock. This adjustment follows AMG’s first-quarter 2025 performance, which showed improved financial guidance, a robust deal pipeline, and ongoing share repurchases. Analysts at TD Cowen have increased their estimated earnings per share for 2025 and 2026, noting the potential for long-term improvements in AMG’s business mix. Despite the positive trajectory, TD Cowen expressed caution due to the stock’s recent price appreciation, which may limit near-term potential for additional gains. These developments reflect AMG’s ongoing efforts to foster growth and support operational independence through strategic partnerships and financial management.

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