Tuesday, an analyst from TD (TSX:TD) Cowen increased the price target for KKR & Co. Inc. (NYSE:KKR) shares to $154.00, up from the previous target of $144.00, while maintaining a Buy rating. The adjustment follows KKR's recent Investor Day, which took place last week on Monday and Tuesday, where management provided guidance on expected cumulative cash generation.
The analyst believes that KKR's guidance of $25 billion in cumulative cash generation from 2024 to 2028 may be conservative by as much as 20%. In response to this outlook, TD Cowen has raised its 12-month price target for KKR by $10 to reflect the potential for excess cash deployment. This new target is based on a blend of sum-of-the-parts (SOTP) analysis and the highest estimates on the Street.
The revised price target assumes that the current combined payout ratio will remain unchanged. It also incorporates a projected return on equity (ROE) of 14-15% for the private equity firm. However, the target has been discounted by 15% to account for uncertainties in the market.
KKR has been identified by the analyst as a favored play within the alternative investment sector. The firm's stock price target upgrade reflects a positive outlook on KKR's financial strategy and its ability to generate and deploy cash effectively in the coming years.
InvestingPro Insights
Following TD Cowen's optimistic adjustment of KKR & Co. Inc.'s price target, a glance at real-time data from InvestingPro provides additional context for investors. KKR's current market capitalization stands at a robust $84.82 billion, reflecting the scale of its operations. The company's P/E ratio, a measure of its current share price relative to its per-share earnings, is 22.49, with a slight adjustment in the last twelve months to 23.05, indicating a stable valuation relative to earnings growth.
InvestingPro Tips highlight that KKR has a history of increasing dividends, having done so for 4 consecutive years, and has maintained dividend payments for 15 consecutive years. This consistency is a positive sign for income-focused investors. Additionally, the company has shown a high return over the last year and a strong return over the past three months, suggesting robust performance in the short term. However, analysts have revised their earnings expectations downwards for the upcoming period and anticipate a sales decline in the current year, which could be a point of consideration for potential investors.
For those looking to delve deeper, InvestingPro offers additional tips on KKR, providing a comprehensive analysis for a more informed investment decision. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to these insights. Currently, there are 11 more InvestingPro Tips available for KKR, ranging from stock price volatility to profitability projections, which could be valuable in assessing the company's future performance.
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