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On Monday, Oppenheimer has adjusted its stock price target for StepStone Group (NASDAQ:STEP), raising it slightly from $57.00 to $58.00. The firm has maintained its Outperform rating on the asset management company's shares. The revision reflects a positive outlook on the company's financial performance.
The increase in the price target is based on Oppenheimer's valuation of StepStone Group's future earnings. The firm projects the company's 2025 fund management distributable earnings to be $2.58 per share. Oppenheimer applies a 21% tax rate to these earnings and adds a 30% premium to a 21.5x next twelve months (NTM) price-to-earnings (PE) ratio. This calculation results in an after-tax market value of $56.90 per share.
To reach the final fair value estimate of $58.00 per share, Oppenheimer adds $1.09 per share of net cash and investments to the after-tax market value. This approach indicates a comprehensive analysis of the company's projected earnings and intrinsic value.
The revised price target suggests that Oppenheimer has confidence in StepStone Group's ability to outperform in the market. The Outperform rating implies that the analyst expects the stock to perform better than the average return of the stocks the analyst covers.
Investors and market watchers often look to such rating changes and price target adjustments as indicators of a stock's potential future movement. The new stock price target for StepStone Group represents a modest increase, signaling a steady but positive expectation for the company's stock performance.
In other recent news, StepStone Group has reported impressive earnings and revenue results. The company's first-quarter 2024 earnings exceeded expectations with an Adjusted Net Income per Share of $0.33, surpassing both the Bloomberg LP Street consensus of $0.28 and JPMorgan's estimate of $0.27. This strong performance was largely attributed to higher-than-expected fee-related revenues and realized carry.
In addition, StepStone reported strong fourth-quarter fiscal 2024 results, with a GAAP net income of $82.5 million and net income attributable to StepStone Group Inc. at $30.8 million, or $0.48 per share. These results were bolstered by a significant 35% increase in fee-related earnings to $50.9 million, with an FRE margin of 33%.
In light of these strong earnings, JPMorgan has raised its price target for StepStone shares to $51.00 from $49.00 and maintained an Overweight rating. The analysts at JPMorgan have also adjusted their full-year estimates for 2024 and 2025 upwards.
In other company news, StepStone's management has expressed a positive outlook on the current macro environment, noting improved fundraising conditions compared to a year ago.
The company has reported approximately $6 billion in new funds, split between $4 billion in Separately Managed Accounts and $2 billion in Commingled Funds. These are recent developments that reflect the continued growth and strong performance of StepStone Group.
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