On Monday, Piper Sandler updated its outlook on GCM Grosvenor Inc. (NASDAQ:GCMG) shares, increasing the price target to $12.50 from the previous $11.50, while maintaining a Neutral rating on the stock. The adjustment comes after the company reported earnings that slightly surpassed both Piper Sandler's and the consensus estimates.
The firm noted that GCM Grosvenor's fee-related earnings exceeded expectations. Although fundraising was down from the previous quarter, management at GCM Grosvenor remains confident that the second half of 2024 will see stronger fundraising, particularly predicting the fourth quarter to be the most robust period of the year.
In light of the recent third-quarter results, Piper Sandler has revised its earnings per share (EPS) forecasts for GCM Grosvenor for the years 2024 and 2025. The estimates have been adjusted upward to $0.69 and $0.79, up from $0.68 and $0.77 respectively.
The revised price target of $12.50 is based on an approximate 16 times multiple of the firm's 2025 distributable earnings (DE) estimate, an increase from the previous 15 times multiple.
This change in the multiple reflects an expansion among peer multiples, attributed to growing confidence in the deal activity environment for the upcoming quarters.
The firm also updated GCM Grosvenor's expected private markets management fee growth for 2024, now projecting an increase of 9% to 11%, compared to previous expectations of "double-digit" growth.
In other recent news, asset management firm GCM Grosvenor has reported substantial financial growth in the third quarter of 2024. The company's fee-related earnings saw an 18% increase year-to-date, while adjusted net income rose by 24% compared to the previous year.
Assets under management (AUM) reached a record high of $80 billion, with fee-paying AUM also hitting a record at $64 billion. In addition, the company raised $1.4 billion during the quarter, marking a 34% increase year-over-year.
GCM Grosvenor's private market strategies now constitute 71% of its AUM, demonstrating the firm's strategic emphasis in this area. The company has also launched new products for individual investors in collaboration with Axxes and CION Investments.
In terms of future expectations, management aims to double fee-related earnings from 2023 to 2028 and anticipates exceeding $2 billion in fundraising in the second half of 2024. These recent developments underline GCM Grosvenor's robust financial performance and its focus on growth through private market strategies.
InvestingPro Insights
GCM Grosvenor's recent performance aligns with Piper Sandler's updated outlook, as reflected in InvestingPro data. The company's revenue growth of 8.2% over the last twelve months supports the positive sentiment. Additionally, GCM Grosvenor's strong return over the last three months, with a 15.76% price total return, indicates growing investor confidence.
InvestingPro Tips highlight that GCM Grosvenor has raised its dividend for 3 consecutive years, currently offering a dividend yield of 3.71%. This consistent dividend growth may appeal to income-focused investors. Moreover, the company is trading at a low P/E ratio relative to near-term earnings growth, with a PEG ratio of 0.49, suggesting potential undervaluation.
For readers seeking more comprehensive analysis, InvestingPro offers additional tips and insights on GCM Grosvenor, with 8 more tips available on the platform.
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