On Friday, Deutsche Bank maintained a positive outlook on KKR & Co. Inc. (NYSE:KKR), raising its price target on the investment firm's stock to $122 from $119, while reiterating a Buy rating. The adjustment reflects a valuation based on various components of the company's earnings and assets.
The price target increase is grounded on a sum-of-the-parts valuation method. This approach includes fee-related earnings valued at 22.6 times, which aligns with the expected three-year compound annual growth rate for these earnings.
Additionally, the valuation considers spread-related earnings at six times and carried interest earnings, which assess carry funds and dry powder over a five-year horizon, at two times multiple on invested capital (MOIC). The book value is also factored in at a multiple of one.
Deutsche Bank outlined several risks that could potentially impact KKR's performance. These downside risks include a significant deceleration in fundraising activities, a broader economic slowdown in the US or globally, an extended correction in the equity markets, and a failure of investors to fully endorse KKR's balance sheet strategy, thereby not awarding the firm a higher price-to-earnings multiple.
Additional concerns include substantial losses on balance sheet investments and any adverse regulatory changes that may hinder KKR's business momentum.
KKR, known for its investments across multiple asset classes, including private equity, energy, infrastructure, real estate, and credit, has been under the scrutiny of analysts who closely monitor the firm's growth trajectory and strategic initiatives.
InvestingPro Insights
For investors seeking a deeper understanding of KKR & Co. Inc. (NYSE:KKR), recent data from InvestingPro shows a robust financial profile. With a market capitalization of $86.88 billion, KKR exhibits a price-to-earnings (P/E) ratio of 23.2, reflecting its current valuation in the market. Moreover, the company's impressive revenue growth of 238.39% over the last twelve months as of Q4 2023 underscores its strong performance in generating income.
InvestingPro Tips highlight KKR's consistent dividend payments, with a track record of maintaining these for 15 consecutive years, and a dividend growth of 6.45% over the last twelve months as of Q4 2023. Additionally, the company's stock price has seen a significant uptick, with a 63.16% total return over the last six months. These insights suggest a potentially attractive opportunity for dividend-seeking investors and those looking for a company with a history of strong returns.
To access more exclusive insights and analytics for KKR, consider subscribing to InvestingPro. There are numerous additional InvestingPro Tips available, providing a comprehensive investment analysis. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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