On Tuesday, Citi maintained its Buy rating on Apollo Global Management (NYSE:APO) and increased the price target to $170 from the previous $162. The adjustment comes after Apollo Global Management reported a robust third-quarter performance, particularly in Strategic Real Estate (SRE), which exceeded expectations.
The company's SRE results for the third quarter were notable for their strong flows and spreads. Although a slight moderation is anticipated for the fourth quarter, the expectation is for SRE to continue expanding sequentially. The asset management division of Apollo Global Management showed resilience with substantial inflows, especially in credit, and robust capital solutions fees, marking the second-highest on record for the firm.
Looking forward, management at Apollo has indicated positive trends in capital markets solutions and a stable outlook for SRE, with a slight decrease expected in Principal Investing Income (PII). Citi's analysis suggests that these forecasts may be on the conservative side.
As a result of these positive indicators, Citi has revised its earnings per share (EPS) estimates for Apollo Global Management upwards to $7.19, $8.61, and $10.19 for the upcoming periods, increased from the previous estimates of $6.90, $8.55, and $10.15. The revised estimates reflect better-than-expected flow trends in both the asset management and retirement solutions segments.
Citi's report indicates continued confidence in Apollo Global Management's growth trajectory, fueled by the company's fundraising capabilities, expansion opportunities in retirement services and Principal Warranty and Collateral (PWC), and a distinguished origination platform. The new price target of $170 reflects Citi's adjusted EPS expectations and the positive outlook for the company.
In other recent news, Apollo Global Management, Inc. reported a strong third quarter in 2024, with record fee-related earnings (FRE) of $531 million and robust spread-related earnings (SRE) of $856 million. The adjusted net income for the company reached $1.1 billion. They have set ambitious targets for the next five years, including significant growth in FRE and SRE, and a doubling of adjusted net income.
Apollo also reported $62 billion in originations for the quarter, with a focus on four major trends to drive future growth. The company aims for both FRE and SRE to reach $10 billion by 2029, with adjusted net income doubling to $15 per share. Apollo is also investing in its third-party insurance business, aiming to double it in the next five years.
InvestingPro Insights
Apollo Global Management's recent performance aligns with several InvestingPro metrics and tips, providing additional context to Citi's bullish outlook. The company's market capitalization stands at $85.19 billion, reflecting its significant presence in the financial services industry.
Apollo's P/E ratio of 15.93 suggests a reasonable valuation relative to its earnings, which is particularly noteworthy given the company's strong performance. This is complemented by an InvestingPro Tip indicating that Apollo has been profitable over the last twelve months, supporting Citi's positive EPS revisions.
The company's robust financial health is further evidenced by its ability to maintain dividend payments for 14 consecutive years, as highlighted by another InvestingPro Tip. This consistency in shareholder returns aligns with the company's strong capital position mentioned in the article.
Apollo's stock has shown impressive momentum, with a 66.78% total return over the past year and a 41.2% return in the last three months. This performance supports Citi's decision to raise the price target and maintain a Buy rating. The stock is currently trading near its 52-week high, with the price at 97.85% of its peak, indicating strong investor confidence.
For readers interested in a more comprehensive analysis, InvestingPro offers 15 additional tips for Apollo Global Management, providing a deeper understanding of the company's financial position and market performance.
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