On Friday, Citi revised its price target for Apollo Global Management (NYSE:APO), lowering it to $135 from the previous $140, while still maintaining a Buy rating on the stock. The adjustment comes in response to the company's second-quarter results and a recalibrated outlook for the future.
The investment firm's Strategic Real Estate (SRE) earnings for the second quarter fell short of expectations, leading to a more cautious projection for this segment. Citi's analysis indicates that certain short-term factors, such as hedging activities, the expiration of high-return businesses, and pressures on alternative investment returns, are expected to continue in the near term. Despite these challenges, the long-term perspective for Apollo Global Management is considered to be robust.
The asset management sector is showing strong trends, and Citi remains optimistic about Apollo's potential in the second half of 2024. Capital markets activities were highlighted as a positive aspect, anticipated to sustain at healthy levels, albeit not as high as those seen in the second quarter of 2024.
In light of these factors, Citi has also revised its earnings estimates for Apollo for the years 2024 and 2025, reducing them to $7.14 and $8.49 per share, respectively, from the previous estimates of $7.53 and $9.12 per share. The firm's stance remains positive on Apollo's narrative, viewing the current market pressures as an opportunity for investors to enter at an attractive point, although it acknowledges that it may take some time for the headwinds to diminish.
In other recent news, Apollo Global Management reported strong Q2 financial results, including record quarterly fee-related earnings (FRE) of $516 million and robust subsidiary reported earnings (SRE) of $710 million. The company invested $70 billion and recorded inflows of $39 billion for the quarter. In addition, Apollo successfully closed three private equity transactions, and its hybrid equity vehicle has delivered positive returns for 16 consecutive quarters.
TD Cowen revised its price target for Apollo from $147 to $137, maintaining a Buy rating despite concerns about the guidance for Apollo's insurance division, Strategic Risk Enterprise. BMO Capital also adjusted its price target for Apollo, reducing it to $123 from $125, while maintaining an Outperform rating, citing strong fundamentals in Apollo's asset management operations.
These are recent developments for Apollo, which continues to navigate through the financial landscape. The company's credit franchise 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.
InvestingPro Insights
As investors consider Citi's revised price target for Apollo Global Management (NYSE:APO), they may also find value in the latest metrics and expert insights from InvestingPro. Apollo's market capitalization stands at a robust $58.78 billion, reflecting its significant presence in the financial services industry. Despite analysts anticipating a sales decline in the current year, Apollo's revenue growth over the last twelve months has been impressive at 120.25%, with a gross profit of $8.849 billion and an operating income margin of 15.49%.
InvestingPro Tips highlight that while Apollo's stock price movements have been volatile, the company has maintained dividend payments for 14 consecutive years, demonstrating a commitment to shareholder returns. Moreover, Apollo's liquid assets surpass its short-term obligations, indicating financial resilience. With a P/E ratio of 13.64, the company is trading at a high Price/Book multiple of 4.93, which suggests investor confidence in its assets and future growth potential. For those looking to explore further, there are an additional 11 InvestingPro Tips available on InvestingPro's Apollo page, providing deeper insights into the company's performance and outlook.
Investors may also note that according to InvestingPro, Apollo's fair value is estimated at $151.78, which is higher than the current price, indicating potential undervaluation. With the next earnings date on the horizon for August 1, 2024, and a dividend yield of 1.6%, Apollo presents an interesting case for those seeking to invest in a prominent player with a strong track record in the financial services industry.
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