On Wednesday, Citi made an adjustment to its financial outlook on Blue Owl Capital (NYSE: OWL), raising the price target from $20.00 to $21.00. The firm sustained its Buy rating on the asset management company's stock. The revision was attributed to updated estimates that reflect the current market environment.
The analyst from Citi stated that slight increases in the management fee projections for the first quarter of 2024 were balanced out by tax rate changes. Consequently, the projected distributable earnings (DE) per share for the quarter remained steady at $0.16, aligning with the consensus. The analyst's forecasts for the coming years have seen a modest increase, with the estimates for 2024 and 2025 now at $0.81 and $1.05 per share, respectively, up from the previous $0.79 and $1.03.
The new price target of $21.00 represents a multiple of 24.6 times and 19.0 times the revised earnings estimates for 2024 and 2025. It's important to note that these updated figures do not take into account the potential impact of recent business deals that Blue Owl Capital has made.
Citi's continued endorsement of Blue Owl Capital stems from several key factors. The analyst highlighted the company's diverse business mix, the permanent capital model it operates, its strategic position within the wealth management channel, and the opportunities for growth within the insurance sector. Moreover, Citi anticipates that Blue Owl Capital has the potential to achieve over 20% growth in both revenue and earnings in the upcoming years.
InvestingPro Insights
With Citi's optimistic outlook on Blue Owl Capital, investors may find additional insights from InvestingPro useful in shaping their investment strategy. Notably, Blue Owl has demonstrated a commitment to shareholder returns, having raised its dividend for three consecutive years, a testament to its financial resilience and management's confidence in the company's profitability. Aligning with Citi's positive stance, analysts predict Blue Owl will be profitable this year, with net income expected to grow, reinforcing the company's robust financial health.
InvestingPro data highlights Blue Owl's substantial revenue growth over the last twelve months, with a 26.42% increase, and a gross profit margin impressively standing at 60.1%. These figures suggest a strong operational performance that could underpin the stock's value. Furthermore, the company's Price / Book multiple is at 13.36, which, coupled with a high earnings multiple (P/E Ratio of 157.18), indicates market confidence in Blue Owl's assets and future earnings potential.
For those considering deeper analysis, InvestingPro offers additional insights and metrics. Currently, there are 9 more InvestingPro Tips available for Blue Owl Capital, which can be accessed through InvestingPro's platform. To enhance your investment research, use the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription. These tips and data points could provide a more comprehensive view of the company's financial outlook and market position.
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