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On Monday, JPMorgan reiterated its Neutral rating on Blue Owl Capital (NYSE: OWL), a $13.3 billion alternative asset manager with a GREAT financial health score according to InvestingPro, maintaining a steady price target of $23.00. With 10+ additional ProTips and comprehensive analysis available on InvestingPro, investors can gain deeper insights into OWL’s performance metrics and growth potential. The reaffirmation follows the company’s reported Distributable Earnings (DE) per share of $0.21, which fell short of the anticipated $0.22 according to Bloomberg consensus expectations. Despite Blue Owl’s record quarter of capital raising, totaling $9.5 billion in equity commitments and $4.3 billion in the credit segment, along with $13.4 billion in direct originations, the firm did not achieve the expected growth in Fee-paying Assets Under Management (FPAUM). The company maintains strong fundamentals with impressive revenue growth of 32.6% and offers a 3.06% dividend yield, though it trades at a relatively high P/E ratio of 117.45. The actual FPAUM at the end of the period was $160 billion, missing the consensus projections of $163 billion.
The analyst noted that, unlike Ares Management (NYSE:ARES), which saw an improvement in its gross to net direct lending conversion rate over the year, Blue Owl experienced a weaker conversion rate in the fourth quarter of 2024, at 16% compared to the full year’s rate of 32%. This metric’s sensitivity to macroeconomic factors is seen as having a significant impact on the firm’s profit and loss statement. Additionally, it was observed that credit management fees showed minimal quarter-over-quarter growth, from $187 million to $215 million, when the effects of the Atalaya acquisition were excluded.
Management’s commentary during the earnings call was referenced, acknowledging that the reopening of the Broadly Syndicated Loan (BSL) market early in 2024 did not impact Blue Owl as initially seen. Refinancing activity remains within the OWL system, but the terms are presumed to be less favorable for lenders. Despite the lack of FPAUM growth, the remainder of the earnings report and management’s comments were predominantly positive, with strong fundraising in 2024 and expectations of a significant increase in 2025.
Blue Owl’s previously issued guidance for robust growth in Fee-related Earnings (FRE) and Fee-related Realized Revenue (FRR) for 2025 was maintained. The company’s efforts to diversify across funding sources, product types, and geographies are reportedly starting to yield results, with additional details provided on recent acquisitions and fundraising updates for IPI included in the updated model. Long-term growth guidance was also outlined, indicating an expected compound annual growth rate (CAGR) of over 20% for FRE through 2029. The stock’s decline on Friday was attributed to investor expectations for more details on long-term growth and the 2024 acquisitions. JPMorgan stands by its Neutral rating and December 2025 price target of $23 for Blue Owl Capital’s stock. According to InvestingPro analysis, Blue Owl Capital currently appears undervalued based on its Fair Value calculation. Investors seeking detailed valuation metrics, comprehensive financial analysis, and access to the full Pro Research Report for OWL and 1,400+ other stocks can subscribe to InvestingPro for in-depth insights and expert analysis.
In other recent news, Pagaya (NASDAQ:PGY) Technologies and Blue Owl Capital have made significant strides in the financial sector. Pagaya recently entered into a forward flow agreement with Blue Owl, aiming to sell up to $2.4 billion in consumer loans over the next 24 months. This agreement is part of Pagaya’s strategy to fund loan originations efficiently, complementing its asset-backed securities program which has amassed over $26 billion since its inception.
In addition to this merger, Pagaya received an upgrade from Citi analysts, shifting its stock ratings from Neutral to Buy. Analyst Peter Christiansen cited factors such as increased network volume, rising personal loan demand, and operational efficiency improvements as reasons for the upgrade.
In related news, Blue Owl Capital also received positive attention from financial analysts. JMP Securities raised its price target for Blue Owl to $32, maintaining a Market Outperform rating. Citi analysts also reinstated coverage of Blue Owl with a Buy rating and a price target of $30. Both firms highlighted the company’s effective business model and potential for growth as reasons for their positive outlooks.
Lastly, Blue Owl Capital was involved in a $2.3 billion loan for a Texas data center project in collaboration with Newmark Group (NASDAQ:NMRK) and other partners. These recent developments reflect the companies’ growth prospects and financial strategies.
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