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On Tuesday, JPMorgan analysts, led by Kenneth Worthington, increased the price target for Ares Management L.P. (NYSE: NYSE:ARES) shares to $163 from $149 while maintaining an Overweight rating. The adjustment follows Ares Management’s first-quarter earnings, which surpassed expectations, and the firm’s strong financial performance. According to InvestingPro data, ARES has demonstrated impressive momentum with a 21.19% return over the past year, though current analysis suggests the stock is trading above its Fair Value. The stock currently trades within a broader analyst target range of $135-$193.
Ares Management reported distributable earnings per share of $1.09, exceeding the Bloomberg consensus of $0.95. The company’s fee-related earnings (FRE) and pre-tax distributable earnings (PRE) also topped projections, coming in at $367 million and $41 million, respectively, against consensus figures of $358 million and $22 million. Pre-tax distributable earnings reached $406 million, surpassing the anticipated $372 million. With a market capitalization of $52.56 billion and revenue growth of 6.96% in the last twelve months, ARES continues to demonstrate strong fundamentals. InvestingPro subscribers can access 12 additional key tips and a comprehensive Pro Research Report for deeper insights into ARES’s financial health and growth prospects.
The first quarter of 2025 marked the initial period in which Ares Management included contributions from the recently acquired GCP in its profit and loss statement. This strategic move, completed in early March 2025, bolstered Ares’ performance during a quarter that saw limited activity levels among alternative asset management peers due to a quieter mergers and acquisitions and capital markets environment.
Ares Management achieved a record-breaking $20.2 billion in inflows for the first quarter, although slightly below the street estimate of $22.4 billion. The addition of $45.3 billion in capital from GCP helped the firm conclude the quarter with $142 billion in available capital, up from $133 billion in the previous quarter. This positions Ares well to capitalize on market dislocations, with $99 billion of its dry powder not yet generating fees.
The firm’s total deployment for the quarter was a robust $31.4 billion, maintaining a strong year-over-year increase from $18.6 billion. Ares Management’s credit segment saw a gross to net deployment ratio improve to 49% in the first quarter of 2025, contributing to a fee-paying assets under management (FPAUM) figure of $335 billion, which exceeded the consensus estimate of $332 billion.
Ares Management highlighted the resilience of its portfolio against macroeconomic challenges, citing positive indicators such as over 11% year-over-year EBITDA growth for U.S. direct lending borrowers, low loan-to-value ratios averaging 42%, and interest coverage of twice the amount. The firm also noted a decline in non-accrual rates to 1.5% for its publicly managed Business Development Company (BDC), Ares Capital Corporation (ARCC), which is below the company’s historical average since the Global Financial Crisis. InvestingPro data reveals that ARES maintains a healthy 2.79% dividend yield and has consistently raised its dividend for five consecutive years, demonstrating its commitment to shareholder returns despite trading at a relatively high P/E multiple of 78.1x.
The company’s long-standing experience in direct lending through various credit cycles, including the Global Financial Crisis and the COVID-19 pandemic, has equipped it with the expertise and resources to navigate uncertain times effectively. This sentiment is echoed by investors, as evidenced by Ares’ notable post-earnings performance on Monday, with shares rising 2.3% compared to a 1.1% decline on average for its peers.
JPMorgan also highlighted Ares Management’s robust investment performance across key asset classes, with five out of six credit strategies maintaining long-term gross returns in the double digits. Despite global tariffs, management’s outlook remains positive, contrasting with the reported slowdown in flows for peers.
Looking ahead, JPMorgan’s 2026 distributable earnings per share estimate for Ares Management takes a slight reduction to $6.36, primarily due to margin considerations. However, the firm’s strong fundamentals have led to an increase in the multiple applied to Ares’ post-tax fee-related earnings, resulting in the raised price target for December 2025.
In other recent news, Ares Management Corp reported its first-quarter 2025 financial results, exceeding Wall Street expectations. The company posted an earnings per share (EPS) of $1.09, surpassing the projected $0.98, while revenue reached $922 million, exceeding the forecast of $912.36 million. Additionally, Ares Management completed the acquisition of GCP International, which is expected to bolster its infrastructure capabilities. Analysts from various firms have noted the company’s strong performance, with some highlighting the significant increase in management fees, which rose by 18% year-over-year. The firm also reported a 40% year-over-year growth in total realized income, demonstrating robust operational execution. Ares Management remains optimistic about continued growth in alternative and private credit markets, with plans to raise $7 billion for GCP in the coming quarters. The company declared a quarterly dividend of $1.12 per share, marking a 20% increase over the same quarter last year.
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