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On Thursday, Raymond (NSE:RYMD) James initiated coverage on Apollo Global Management (NYSE:APO), assigning a Strong Buy rating to the asset management firm's stock along with a price target of $173.00. The firm's analysts highlighted Apollo's potential for robust growth, operational advantages, and excellent risk management as key factors for the positive outlook. Currently trading at $128.45 with a market capitalization of $73.28 billion, InvestingPro analysis suggests the stock is undervalued, with analyst targets ranging from $124 to $193.
Apollo Global Management's stock has seen a notable decline, dropping approximately 22% since the beginning of the year. However, Raymond James sees this downturn as an opportunity, citing the company's growth profile, which includes a targeted ~15% earnings per share (EPS) compound annual growth rate (CAGR) through 2029. This growth is expected to be driven by strong inflows in wealth and retirement services, with additional potential boosts from strategic acquisitions. The company maintains a solid P/E ratio of 17.3 and has consistently paid dividends for 15 consecutive years, currently yielding 1.44%. InvestingPro subscribers have access to 10+ additional key insights about Apollo's financial health and growth prospects.
The firm's analysts are optimistic about Apollo's ability to increase its annual Global Wealth flows to $20 billion by 2025-2026, up from $12 billion in 2024, and to maintain an average annual flow of $30 billion through 2029. The newly launched asset-backed credit (ABC) is also expected to contribute to growth, with demand anticipated from wealth clients for collateralized products. With current revenue of $25.89 billion and a strong current ratio of 1.51, the company maintains robust liquidity to support its growth initiatives.
Apollo's strong brand and robust distribution network are likely to enhance inflows, according to Raymond James. The analysts forecast that Retirement Service flows will reach over $75 billion on a run-rate basis in 2025-2026, compared to the already strong $71 billion in 2024. While Apollo is predicted to stay out of the pension risk transfer (PRT) market in the near term due to litigation pressures, it is well-positioned to regain market share in 2026 and beyond.
Inorganic opportunities, such as accretive deals for complex products like variable annuities, are also on the horizon for Apollo. The firm is capable of leveraging affiliates such as Venerable Holdings and ADIP/ACRA to facilitate these deals. Furthermore, Apollo's Private Equity Fund IX, with an unrealized value of $25.4 billion as of year-end 2024, is ready for monetization once market conditions stabilize. Raymond James' coverage reflects confidence in Apollo Global Management's strategic positioning and growth trajectory.
In other recent news, Apollo Global Management has reported preliminary financial results for the first quarter of 2025, anticipating alternative net investment income of approximately $290 million before taxes, translating to an estimated annualized return of 9%. TD Cowen has maintained a Buy rating for Apollo Global Management, with a price target of $214, following a series of investor meetings and despite mixed market expectations. The analysts at TD Cowen noted Apollo's strong performance amidst economic uncertainty and expect long-term favorable outcomes for the company. Additionally, Apollo is reportedly exploring the sale of Cox Media Group, potentially valuing the company at around $4 billion, with Moelis (NYSE:MC) & Co. assisting in the exploration of this opportunity.
In another significant development, Apollo has agreed to acquire a majority stake in OEG Energy Group from Oaktree Capital Management and other investors, valuing OEG at over $1 billion. This transaction is expected to close in the second quarter of 2025, pending regulatory approvals. Apollo's acquisition aligns with its broader commitment to climate and energy transition-related projects. The company continues to focus on growth opportunities in both its asset management and retirement services segments, capitalizing on emerging growth drivers.
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