On Wednesday, Jefferies updated its outlook on Apollo Global Management (NYSE:APO), raising the investment firm's price target to $129.00 from $117.00, while the stock continues to hold a "Hold" rating. The adjustment follows a reassessment of Apollo's second-quarter performance and future expectations.
Despite a slight decrease in distributable earnings (DE) per share estimates for the second quarter of 2024, dropping to $1.78 from $1.83, and a minor fall in fee-related earnings (FRE) to $0.79 per share from $0.81, the firm's year-over-year growth projections remain positive. The revised figures reflect higher than-anticipated outflows from Athene and the exclusion of an expected $17 billion in inorganic growth from Athora.
Jefferies' new estimates for 2024 suggest a 15% year-over-year increase in FRE, aligning with the lower end of Apollo's guidance of 15-20%. Furthermore, the forecast for funds from realized results (FRR) indicates a 12% year-on-year growth, which is slightly below the company's projected low-to-mid-teens growth.
For the second quarter of 2024, the firm anticipates a FRE margin of 55.7%, an improvement from the 55.1% margin reported in the previous quarter. Additionally, Jefferies expects a 150 basis point margin expansion for the full year of 2024, surpassing Apollo's guidance of a 100 basis point increase. This outlook underscores the firm's performance and operational efficiency despite the adjustments made to the financial estimates.
In other recent news, Apollo Global Management and Kyndryl Holdings are eyeing a joint acquisition of DXC Technology (NYSE:DXC). The potential bid could value DXC Technology's shares between $22 and $25. Concurrently, DXC Technology is also planning to divest its insurance software business, which could fetch upwards of $2 billion.
In financial news, Apollo Global has priced a $750 million senior notes offering with a 5.800% interest rate, due in 2054. The net proceeds, estimated at approximately $743.4 million, will be allocated for general corporate purposes. Additionally, Apollo Global has also launched another offering of senior notes, guaranteed by several of its subsidiaries.
Meanwhile, Intel Corporation (NASDAQ:INTC) is holding steady amid potential $11 billion investment negotiations with Apollo for a manufacturing facility in Ireland. Deutsche Bank has maintained a Hold rating on Intel in light of these developments.
Lastly, Sony (NYSE:SONY) Pictures Entertainment and Apollo Global Management are reportedly in talks to acquire and split Paramount Global for $26 billion, marking a significant move in the media landscape.
These are the recent developments involving Apollo Global Management.
InvestingPro Insights
Apollo Global Management (NYSE:APO) has been a topic of interest following Jefferies' recent price target update. To provide further context to these developments, let's look at some key metrics and InvestingPro Tips that could offer additional insights into the company's financial health and market performance.
InvestingPro Data shows that Apollo's market capitalization stands at a robust 67.22 billion USD, reflecting its significant presence in the financial services industry. In terms of profitability, Apollo boasts a P/E ratio of 13.07, which, when adjusted for the last twelve months as of Q1 2024, slightly increases to 13.71. This valuation metric indicates the company's earnings relative to its share price, which can be a useful indicator for investors assessing the stock's value. Additionally, the company's revenue growth for the same period is an impressive 120.25%, highlighting its capacity to increase earnings.
An InvestingPro Tip worth noting is Apollo's high return over the last year, with a one-year price total return of 56.75%. This performance is indicative of the firm's strong market position and operational success. Moreover, analysts predict the company will be profitable this year, a sentiment that aligns with the positive outlook on the firm's future earnings potential.
Investors interested in further analysis and additional InvestingPro Tips for Apollo Global Management can explore https://www.investing.com/pro/APO. There, they can find a comprehensive list of 13 additional tips to guide their investment decisions. For those considering a subscription, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking even more valuable insights.
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