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On Friday, JPMorgan analyst Kenneth B. Worthington increased the price target for StepStone Group (NASDAQ:STEP) shares to $68.00 from $66.00, while maintaining an Overweight rating on the stock. The adjustment follows StepStone’s reported first-quarter 2025 after-tax net income (ANI) per share of $0.68, which exceeded Bloomberg consensus estimates of $0.44 and JPMorgan’s own estimate of $0.46. With a current market capitalization of $4.51 billion and trading near $58.72, InvestingPro analysis suggests the stock is fairly valued. InvestingPro data shows the company has delivered an impressive 43.7% return over the past year, with analyst targets ranging from $51 to $74.
StepStone’s management fees from commingled funds reached $125 million, surpassing JPMorgan’s expectation of $110 million. The company also reported robust catch-up fees of $15.7 million, driven primarily by a significant $1.2 billion close for Real Estate Partners SREP V, and a $300 million final close for Tactical Growth Funds STGF V. These figures outperformed JPMorgan’s estimate of $11.3 million. According to InvestingPro data, the company has demonstrated strong revenue growth, with a 65.09% increase in the last twelve months. For deeper insights into StepStone’s financial health and growth metrics, subscribers can access the comprehensive Pro Research Report, which covers over 1,400 US stocks.
The firm’s fee-related earnings (FRE) of $94 million were notably higher than the Street’s projection of $73 million and JPMorgan’s forecast of $78 million. StepStone’s corresponding 44% margin exceeded the anticipated 37% by the Street and JPMorgan’s 40% estimate. Even excluding catch-up fees, the margin for the quarter stood at 40% and at 37% over the trailing twelve months (TTM), both setting records for the company since going public.
StepStone also saw record performance contributions, with gross realizations of $81 million and net realizations of $42 million. Despite an increase in total non-controlling interest (NCI) year-over-year from $21 million to $33 million, which was above JPMorgan’s model of $28 million, the company’s strong results were not significantly affected.
The company’s successful fundraising efforts and full payment-adjusted AUM (FPAUM) conversion have been highlighted as key strengths. Capital collections in the fourth quarter of fiscal year 2025 contributed to record annual results for AUM fundraising, approximately $31 billion, and FPAUM growth, $27.5 billion. The private wealth sector was particularly impressive, with net asset value (NAV) more than doubling over the fiscal year to $8.2 billion.
According to Worthington, StepStone’s strong fiscal 2025 performance puts the firm ahead of its fiscal 2028 target to at least double FRE compared to fiscal 2023. The company’s 37% core FRE margin for the recently completed fiscal year has already met the mid-30s margin goal set during the 2023 investor day, well within the five-year horizon.
Worthington concluded by reiterating JPMorgan’s positive stance on StepStone’s stock, citing the company’s healthy results across the alternative asset management (Alt. AM) peer set and its potential growth vectors, including international distribution expansion and strategic acquisitions. InvestingPro analysis reveals several additional positive indicators, including expected net income growth this year and strong five-year returns. InvestingPro subscribers have access to 7 more exclusive ProTips and detailed financial metrics that provide crucial insights into StepStone’s market position and growth potential.
In other recent news, Step Energy Services reported a significant decline in revenue for the fourth quarter of 2024, with figures dropping to $147 million from $256 million in the previous quarter. Despite a slight increase in full-year revenue to $955 million from $946 million in 2023, the company faced a net loss of $45 million for the quarter. Step Energy remains cautiously optimistic about 2025, particularly in the Canadian market, although challenges are anticipated in the U.S. market. The company has achieved technological advances, notably in dual fuel fracturing capacity and coiled tubing, which could bolster its competitive edge. Analysts from RBC and ATB Capital have taken note of these developments, particularly the strategic decisions regarding U.S. operations and equipment management. Step Energy has reduced its debt significantly since 2018 and plans further reductions, which is a positive aspect for investors. The company is also exploring opportunities for equipment consolidation and monitoring potential impacts from tariffs and exchange rate fluctuations. These strategic moves and recent financial results are crucial for investors to consider as they assess Step Energy’s future prospects.
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