Barclays reiterated its Overweight rating on Apollo Global Management (NYSE:APO) with a consistent price target of $128.00. The firm's focus is on the upcoming 2024 Investor Day hosted by Apollo on October 1, where they anticipate the company will present updated medium to longer-term objectives. Key areas of interest include assets under management (AUM) across various categories, third-party fundraising efforts, and a suite of financial metrics such as fee-related earnings (FRE), FRE growth, seed revenue earnings (SRE), permanent investment income (PII), and adjusted net income.
Additionally, the financial institution is looking to understand Apollo's revenue strategies for its Capital Solutions segment, FRE margin, compensation ratios, operating leverage, and details on Athene's gross invested assets and inflows. The allocation of capital and annual origination figures are also points of interest. With Apollo having recently revised its FY24 SRE growth guidance from low double-digit to mid-single-digit growth, there is a heightened investor focus on the growth prospects for Athene, specifically regarding spreads, flows, and capital.
Barclays is also keen on gaining insight into Apollo's strategic moves, such as their fixed income replacement strategy and plans to expand in the retail market, including the implications of providing liquidity in exchange-traded funds (ETFs). While the firm anticipates mid-teen compound annual growth rates (CAGRs) for AUM and FRE, and low double-digit growth in SRE, they also note the possibility of Apollo revealing less obvious growth drivers at the upcoming event. However, Barclays expects less upside to longer-term growth in Apollo's Capital Solutions segment compared to the Street's FY26 expectations, due to the significance of debt origination.
In other recent news, Apollo Global Management has been actively involved in several significant financial ventures. The firm recently partnered with Citigroup Inc (NYSE:C). to establish a $25 billion private credit and direct lending program, a move marking the financial sector's growing interest in the $2 trillion private credit market. The venture also involves Mubadala Investment Company and Athene, Apollo's annuity, and retirement services unit. The program is designed to serve borrowers deemed too risky for traditional bank loans, often utilized for substantial financial maneuvers.
In addition to this, Apollo Global Management has proposed a substantial investment of up to $5 billion in Intel (NASDAQ:INTC), the semiconductor giant. However, the discussions are still in the early stages and not guaranteed to result in a finalized deal. This development follows Apollo's earlier announcement of plans to acquire a 49% stake in a joint venture linked to Intel's new manufacturing facility in Ireland.
Furthermore, Apollo has announced a strategic financing and capital markets collaboration with BNP Paribas (OTC:BNPQY). The leading global bank has committed an initial $5 billion in financing to support investment-grade, asset-backed credit originated by Apollo and ATLAS, Apollo's majority-owned warehouse finance and securitized products business. This collaboration is expected to boost securitizations sourced by Apollo and ATLAS issuer clients.
Apollo's recent activities have garnered positive feedback from several firms. Wolfe Research initiated coverage on Apollo's shares with an Outperform rating, noting the company's strong position in the Private Credit and Fixed-Deferred Annuity markets. Citi and TD Cowen have maintained their Buy ratings on Apollo, while BofA Securities upgraded Apollo's stock from Neutral to Buy.
InvestingPro Insights
As we anticipate Apollo Global Management's Investor Day, current InvestingPro data and insights provide a contextual backdrop for evaluating the company's performance and potential. With a robust market capitalization of $71.48 billion, Apollo stands as a significant player in the financial services industry. The company's P/E ratio sits at 13.48, reflecting investor valuation of its earnings. Notably, Apollo's stock has been trading near its 52-week high, with the price at 98.87% of this peak, indicating strong market confidence.
InvestingPro Tips highlight that Apollo has maintained dividend payments for 14 consecutive years, showcasing its commitment to shareholder returns. This is further reinforced by a dividend yield of 1.47% and a growth rate of 7.56% in dividends over the last twelve months as of Q2 2024. Additionally, the company's liquid assets exceed its short-term obligations, suggesting financial resilience and stability.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips that delve into Apollo's financial health and market position. With Apollo's strategic initiatives and financial metrics on the horizon, these insights can help frame expectations and investment decisions.
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