On Thursday, Goldman Sachs reinstated coverage on Vinci (EPA:SGEF) Partners (NASDAQ:VINP) stock with a Buy rating, setting a price target of $13.00. The move comes after Vinci Partners completed its merger with Compass, which the analyst believes positions the firm advantageously as one of the largest alternative asset managers in Latin America.
With a market capitalization of $768 million and an attractive 6.27% dividend yield, the company now boasts an expanded presence across seven countries and has nearly tripled its limited partner (LP) base. According to InvestingPro data, analyst targets range from $11.40 to $14.95, suggesting significant upside potential.
The analyst is optimistic about the future fee-related earnings (FRE) growth of the newly combined entity. Expected benefits include enhanced cross-selling prospects due to a complementary client base in both product offerings and regional distribution. InvestingPro analysis shows the company maintains strong financial health with liquid assets exceeding short-term obligations and a healthy current ratio of 12.68x.
Despite the merger potentially leading to a reduced FRE margin initially, there are anticipated opportunities for margin improvement as the company streamlines operations, consolidates back-office functions, and eliminates redundant positions.
Goldman Sachs projects that Vinci Partners' FRE will grow at a compound annual growth rate (CAGR) of 16% from the estimated year 2024 through 2027.
This growth forecast is supported by the potential for additional revenue and cost synergies, building on the company's recent 9.03% revenue growth.
The firm's valuation at 17.97x earnings is deemed attractive, particularly in light of the anticipated growth and operational efficiencies following the merger.
For deeper insights into Vinci Partners' valuation and growth metrics, investors can access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 US equities.
In other recent news, Vinci Partners announced robust Q3 results, showcasing substantial growth in assets under management (AUM). The company reported fee-related earnings of R$53.8 million and adjusted distributable earnings of R$57.1 million.
Additionally, Vinci Partners declared a quarterly dividend of $0.16 per share. The firm's AUM reached R$70 billion, an 8% increase year-over-year, driven by successful fundraising and strategic acquisitions.
The merger with Compass and the acquisition of Lacan were significant contributors to the AUM growth. The Compass merger added $41 billion to the AUM, and the Lacan acquisition is projected to boost AUM and earnings from Q4 2024.
Vinci Partners also reported positive inflows in public equity, while the IP&S segment experienced outflows. The firm raised R$215 million in Q3 for the Vinci Credit Infra fund, with a target of R$2 billion by early 2025.
Despite outflows from certain segments, Vinci Partners remains positive about its future prospects, focusing on AUM expansion and opportunities in the carbon market. The company is preparing for more detailed discussions in its upcoming earnings call, where it will delve into the Compass integration and outline its strategic vision for the future.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.