On Thursday, JPMorgan (NYSE:JPM) resumed coverage on Blue Owl Capital (NYSE: OWL), issuing a Neutral rating with a stock price target of $18.50, slightly down from the previous target of $19.00. The adjustment follows a period during which the firm did not rate the stock. JPMorgan's coverage restarts after a hiatus that included Blue Owl's first quarter 2024 earnings release, which the firm did not review or model due to the restriction.
The investment management company reported first-quarter distributable earnings per share (DE/sh) of $0.17, which was a cent higher than both JPMorgan's estimate and the Bloomberg consensus of $0.16. Despite this beat, the company's fundraising mix and a significant difference between gross and net deployment affected sentiment.
Still, Blue Owl's management highlighted the real estate segment's strong performance, with a notable 2.1% increase in the quarter, along with solid credit metrics and an increase in private wealth flows.
Management at Blue Owl also discussed ongoing efforts towards their target of achieving $1.00 per share in distributions by 2025. Additionally, Blue Owl has been active in mergers and acquisitions, having completed the acquisitions of KAM, an insurance company, and Prima, which deals in liquid real estate and asset-backed securities. These acquisitions are viewed as synergistic to Blue Owl's business.
JPMorgan has made minor adjustments to its financial model for Blue Owl, reducing both the fiscal year 2024 and 2025 earnings estimates by three cents, from $0.86 to $0.83 and $1.06 to $1.03, respectively. These revisions were primarily related to fundraising activities. Despite these changes, JPMorgan's overall perspective on Blue Owl's narrative remains largely the same, maintaining a 25 times multiple on the firm's projected 2025 earnings.
In other recent news, Blue Owl Capital has demonstrated a strong financial performance with robust earnings growth. Deutsche Bank (ETR:DBKGn) and Citi have both issued a Buy rating for the company, setting a price target of $21.00. Deutsche Bank's analysis anticipates a continuation of robust earnings growth for Blue Owl, predicting an annual fee-related earnings growth rate exceeding 20% over the next three years.
The company's strategic acquisitions of Kuvare Asset Management and Prima Financial Advisors were highlighted as significant moves to enhance Blue Owl's financial performance.
On the other hand, TD (TSX:TD) Cowen revised Blue Owl's price target to $21.50 from the previous $23.00, while maintaining a Buy rating. The adjustment followed a recent evaluation of Blue Owl Capital's first quarter results for 2024. Despite the lowered stock price target and earnings estimates, TD Cowen's outlook for Blue Owl Capital remains positive.
In terms of personnel changes, Blue Owl recently appointed Haitham Abdulkarim to lead its institutional business in the Middle East, indicating its strategy to strengthen its presence in the region. Finally, Blue Owl reported a robust first quarter in 2024, marking 12 consecutive quarters of growth.
The company saw increases in fee-related earnings and distributable earnings, and declared a $0.18 per share dividend. These are the most recent developments for Blue Owl Capital.
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