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The Carlyle Group Management Change Could Adversely Impact Business - BofA

Published 09/06/2022, 12:55 PM
Updated 09/06/2022, 01:00 PM
© Reuters. The Carlyle Group (CG) Management Change Could Adversely Impact Business - BofA

By Sam Boughedda

The Carlyle Group (NASDAQ:CG) was downgraded to Underperform from Buy, with its price target lowered to $33 from $58 per share by a BofA Securities analyst.

In his note, the analyst explained that the downgrade was driven by a "reduction to their distributable earnings estimates (2023E/24E: $3.86/3.83 per share from $4.00/$4.44)."

"We apply a 10x multiple (from 15x) to our 2024E cash EPS estimate to obtain our $33 PO, down from $58. We lowered our multiple (10x from 15x) due to an expected deceleration in growth, emerging fundraising challenges, and the surprise CEO departure in August," the analyst wrote.

"We believe the management change could adversely impact employee retention, fundraising, and CG's business strategy including M&A and signals risk to prior financial targets/guidance."

Carlyle Group shares are down 1.6% Tuesday, adding to their more than 40% year-to-date loss.

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