On Thursday, BMO Capital adjusted its outlook on Brookfield Asset Management (NYSE:TSX:BAM), raising the firm's price target to $37.00 from the previous $36.00. The investment firm retained its Market Perform rating on the company's shares. The adjustment comes in anticipation of Brookfield's potential earnings growth as the company heads into late 2024.
The anticipated earnings boost is expected to stem from various sources, including additional contributions from AEL insurance assets, Transition and Real Estate flagship fundraising efforts, and the potential for margin expansion. BMO Capital's analysis suggests that these factors could collectively accelerate Brookfield Asset Management's earnings growth in the upcoming period.
The Market Perform rating, which remains unchanged, indicates that BMO Capital views the company's stock as likely to perform in line with the broader market or its sector. This assessment reflects a balanced view of the risks and rewards associated with Brookfield Asset Management's stock.
In their commentary, BMO Capital provided insight into the rationale behind the price target adjustment and rating maintenance. The firm noted, "Heading into late 2024, earnings growth appears set to accelerate with additional contributions from AEL insurance assets, Transition, and Real Estate flagship fundraising, and margin expansion potential."
BMO Capital also touched upon the stock's valuation, mentioning Brookfield Asset Management's implied 25x FRE (fee-related earnings) valuation. This metric is used to gauge the company's profitability about its stock price, and BMO's commentary suggests that the valuation is a factor in their balanced risk-reward outlook for the stock.
In other recent news, Brookfield Asset Management reported a strong second quarter, with total assets under management reaching approximately $1 trillion. This substantial growth is attributed to the company's focus on essential assets and new sectors such as software, healthcare, and financial infrastructure.
The company's recent acquisitions, including Castlelake and nVent Electric (NYSE:NVT)'s electrical thermal solutions business, have further solidified its position in the renewable power sector.
Brookfield's credit business has witnessed significant growth, managing over $300 billion of assets and a 19% revenue increase in the second quarter. In the same quarter, the company raised $68 billion in capital. Despite market volatility, Brookfield has maintained a positive outlook, anticipating robust deployment volumes and increased transaction activity for the remainder of the year.
The company has also scheduled an Investor Day on September 10th to provide an update on its five-year forecast. With $107 billion of uncalled fund commitments and $1.9 billion of cash on hand, Brookfield's liquidity remains strong.
These are the latest developments surrounding Brookfield Asset Management.
InvestingPro Insights
As BMO Capital projects an earnings uptick for Brookfield Asset Management (NYSE:BAM), recent data from InvestingPro aligns with a positive financial outlook for the company. With a market capitalization of $66.62 billion and an adjusted P/E ratio for the last twelve months as of Q2 2024 standing at 36.58, the company is poised for growth. Notably, BAM's net income is expected to grow this year, a sentiment echoed by analysts who predict the company will be profitable this year. This aligns with the InvestingPro Tips, which further indicate that the company has been profitable over the last twelve months, underscoring its financial stability.
InvestingPro data also shows a dividend yield of 3.94% as of 2024, with a robust dividend growth of 18.75% over the last twelve months, reflecting the company's commitment to delivering shareholder value. Additionally, despite a recent dip with a one-week price total return of -8.12%, the stock's one-year price total return is an impressive 21.43%, suggesting resilience and potential for recovery. The current price is 86.93% of the 52-week high, with a fair value estimate by analysts at $42.5 and an InvestingPro fair value estimate slightly higher at $45.6, indicating room for growth.
These insights, particularly the expected profitability and dividend growth, may further substantiate BMO Capital's optimism regarding Brookfield Asset Management's future performance. For investors seeking a deeper dive into the company's financial health, additional InvestingPro Tips are available, providing a comprehensive analysis of BAM's market position and future prospects.
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