On Monday, BMO Capital Markets updated its outlook on Brookfield Business Partners L.P. (NYSE:BBU), lifting its price target to $32.00 from the previous $31.00. The firm maintained its Outperform rating on the stock.
The adjustment reflects a positive assessment of the company's potential for asymmetric risk/reward. According to BMO Capital, Brookfield Business Partners' current leverage is a point of concern for investors. However, the company's initiatives to recycle capital are expected to alleviate financial pressures and also reveal the undervalued nature of its portfolio companies.
The analyst noted that the improving conditions in financial markets and a rise in mergers and acquisitions (M&A) activity create a favorable environment for Brookfield Business Partners. These factors contribute to the firm's confidence in maintaining the Outperform rating for the company's shares.
Brookfield Business Partners' strategy to manage and lower its financial burden involves the sale or repurposing of assets, which BMO Capital views as a positive move. This strategy is anticipated to not only reduce the company's debt but also to spotlight the hidden value within its diverse portfolio of companies.
In summary, BMO Capital's upgraded price target reflects an optimistic outlook for Brookfield Business Partners, emphasizing the company's financial strategy and the supportive market conditions that could benefit its performance moving forward.
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