On Tuesday, RBC Capital Markets has updated its outlook on shares of Ares Management, L.P. (NYSE: NYSE:ARES), lifting the investment firm's price target from $185.00 to $205.00. The analyst maintained an Outperform rating on the stock, indicating a positive view on the company's future performance. The stock currently trades near its 52-week high of $180.38, having delivered impressive returns of over 50% year-to-date.
The rationale behind the price target increase is Ares Management's robust standing as a leading entity in the private credit sector. With a substantial market capitalization of $54.9 billion and consistent revenue growth, the firm is expected to gain from ongoing strong trends in several markets, including private credit, transformations in the banking sector, global infrastructure development, and private wealth management.
Ares Management is also recognized for its potential resilience in fundraising activities. The analyst highlighted the company's model, which is characterized by a lighter balance sheet approach and a high return on equity (ROE) generation capability.
This model is seen as a key factor in Ares Management's ability to maintain its momentum. InvestingPro data shows the company has maintained dividend payments for 11 consecutive years, with a 20.78% dividend growth in the last twelve months.
Despite previous concerns regarding the company's valuation, the analyst noted that Ares Management's shares trade at only a slight premium compared to the average of its peers when looking at the projected 2026 price to funds from operations (P/FRE) multiples.
According to InvestingPro, which offers 13 additional investment tips for this stock, the company currently trades at a P/E ratio of 79.59x. This observation suggests that the company's stock may be reasonably valued in the context of its growth prospects and industry positioning.
In other recent news, Ares Management Corporation demonstrated robust growth in its third-quarter earnings. The company reported an 18% rise in management fees, a 24% increase in fee-related earnings, and a 28% growth in realized income.
Moreover, Ares deployed nearly $30 billion in the quarter, contributing to a total of $74.6 billion for the year, and raised nearly $21 billion in the third quarter alone.
Despite this, Ares projects strong Q4 performance with anticipated fee-related performance revenues between $160 million and $170 million and expects continued growth in assets under management and performance income in 2025 and beyond. These developments highlight a period of strong performance and optimism for Ares Management Corporation.
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