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On Friday, Raymond (NSE:RYMD) James reaffirmed its Strong Buy rating and $173.00 price target for Apollo Global Management (NYSE:APO), currently trading at $131.70 with a market capitalization of $75.27 billion, highlighting the firm’s collaboration with major banks to enhance liquidity in private credit markets. According to InvestingPro, Apollo maintains a GOOD financial health score and has shown strong returns over the past decade. Apollo Global Management is working alongside financial institutions such as J.P. Morgan and Goldman Sachs, aiming to broaden its market making operation. This partnership is expected to not only extend Apollo’s services but also provide the banks with new revenue streams from fees. The company’s strong financial position is evidenced by its current ratio of 1.79, indicating liquid assets exceed short-term obligations.
The increased liquidity, as a result of this collaboration, is anticipated to make private credit assets more appealing to a wider array of investors, including retail investors. Traditionally, the need for rapid access to funds has been a significant obstacle for individual investors looking to enter the private credit space. By addressing this challenge, Apollo and its banking partners could potentially stimulate further market growth and fundraising opportunities.
Raymond James analyst underscored the potential benefits of this strategic move for Apollo, suggesting that it could lead to a larger market for the company’s fundraising efforts. Retail investors, who generally seek more immediate liquidity, might find private credit assets more accessible if these liquidity enhancements are realized.
The financial services firm has also updated its earnings per share (EPS) estimates for Apollo, taking into account the company’s own projections for near-term pressures on spread-related earnings. This cautionary note reflects Apollo’s strategic positioning as it navigates the evolving landscape of asset management. With 12 analysts recently revising earnings estimates downward, InvestingPro subscribers can access comprehensive analysis and additional insights through the Pro Research Report, available for over 1,400 US stocks.
The reaffirmation of the Strong Buy rating and the $173.00 price target by Raymond James comes at a time when Apollo Global Management is actively seeking to innovate within the private credit sector, potentially unlocking new investor segments and capitalizing on the growing demand for alternative asset classes. The company has maintained dividend payments for 15 consecutive years, with analyst targets ranging from $135 to $179 per share. For deeper insights into Apollo’s valuation and growth potential, including 8 additional ProTips, visit InvestingPro.
In other recent news, Apollo Global Management Inc. has secured nearly $1 billion in private debt to finance its acquisition of PowerGrid Services from Sterling Group. The debt package, provided by Brookfield Asset Management (TSX:BAM), Blackstone (NYSE:BX) Inc., and JPMorgan Chase (NYSE:JPM) & Co., supports Apollo’s estimated $2 billion purchase of PowerGrid. The financing includes a $650 million term loan, a $200 million delayed-draw term loan, and a $125 million revolving line of credit. Additionally, Apollo has acquired a majority stake in PowerGrid Services, aiming to expand its growth in the electric utility sector with support from existing investors and The Sterling Group.
In another major development, Apollo-managed funds are set to acquire Hav Energy LNG Holding AS, a maritime LNG infrastructure platform. This acquisition involves 10 LNG carriers, including vessels under construction expected to be delivered by 2026. Meanwhile, Apollo’s portfolio company, New Home Co., will acquire Landsea Homes Corporation for approximately $1.2 billion in an all-cash transaction. This acquisition is anticipated to close in the third quarter of 2025, subject to customary conditions.
On the financial front, JPMorgan has adjusted its price target for Apollo Global Management to $151, down from $161, following the company’s first-quarter earnings report. Apollo’s adjusted net income per share was $1.82, slightly below Bloomberg’s consensus estimate of $1.85. Despite this, Apollo reported strong fee-related earnings of $559 million, surpassing consensus expectations. JPMorgan maintains an Overweight rating on Apollo, citing the firm’s robust fundamental business drivers and potential for management fee growth.
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