On Friday, BMO Capital adjusted its price target for Apollo Global Management (NYSE:APO), reducing it to $123 from the previous $125. Despite the decrease, the firm sustained its positive outlook on the company with an Outperform rating.
BMO Capital's stance comes amid recalibrated expectations for Substantially Realized Earnings (SRE) but acknowledges strong fundamentals in Apollo's asset management operations. The company has witnessed significant inflows, a record in debt origination, and robust capital deployment, which are anticipated to be central to Apollo's future fee revenue growth.
The financial firm reiterated its confidence in Apollo Global Management, citing the firm's potential for mid-teens earnings growth. The current valuation of Apollo, with a 14x multiple, was highlighted as offering relative value within the alternative asset management sector.
Apollo Global Management's performance is being closely watched by investors as the company continues to navigate through the financial landscape, with BMO Capital's latest assessment reflecting an optimistic view on its financial health and market position. The reiteration of the Outperform rating by BMO Capital underscores the belief in the company's ability to maintain its growth trajectory and deliver value to its shareholders despite the minor adjustment in the price target.
In other recent news, Apollo Global Management announced robust Q2 financial results, with record quarterly fee-related earnings (FRE) of $516 million and strong subsidiary reported earnings (SRE) of $710 million. The company also reported significant capital deployment and inflows, investing $70 billion and recording inflows of $39 billion for the quarter. Apollo has successfully closed three private equity transactions recently and its hybrid equity vehicle has delivered positive returns for 16 consecutive quarters.
The company's credit franchise also had a strong quarter, with the total return fund up nearly 2% and structured credit and ABS up 2%. Apollo's strategic outlook remains positive, with expectations of strong growth over the next decade in various sectors, including infrastructure and energy transition, and in the retirement services market. The retirement services business, through Athene, is expected to achieve mid-single-digit SRE growth this year and double-digit growth next year.
These are recent developments for Apollo, which continues to capitalize on opportunities in both the private and public investment markets, with a particular focus on expanding its reach in Asia and scaling its origination capabilities globally. The company is confident in reaching its $70 billion organic inflow target for the full year.
InvestingPro Insights
Recent analysis from InvestingPro underscores the nuanced financial landscape Apollo Global Management (NYSE:APO) is navigating. With a market capitalization of $59.32 billion and a robust revenue growth of 120.25% in the last twelve months as of Q1 2024, Apollo stands out as a prominent player in the Financial Services industry. The company's price-to-earnings (P/E) ratio, currently at 11.05, and an adjusted P/E ratio for the last twelve months of 12.28, reflects a market that recognizes its earnings potential.
InvestingPro Tips suggest that while analysts have revised their earnings expectations downwards for the upcoming period and anticipate a sales decline this year, Apollo has maintained a strong track record of dividend payments for 14 consecutive years, which may appeal to income-focused investors. Additionally, the firm's liquid assets exceed its short-term obligations, suggesting financial resilience in the face of market volatility. According to InvestingPro, there are over 10 additional tips available that provide deeper insights into Apollo's financial health and market performance.
Investors may find Apollo's current trading at a high price-to-book multiple of 4.44, as of the last twelve months, indicative of the market's valuation of the company's assets relative to its equity. The dividend yield stands at 1.6%, with a notable dividend growth of 15.62% in the same period, which could be a signal of the company's commitment to returning value to shareholders. The next earnings date is set for August 1, 2024, a date that market participants are likely to watch closely.
For those investors seeking to make informed decisions, the additional context provided by InvestingPro's real-time data and tips can be a valuable resource in assessing Apollo's investment potential.
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