On Thursday, Keefe, Bruyette & Woods (KBW) revised its stock price target on The Carlyle Group LP (NASDAQ:CG) to $48 from the previous $50, while maintaining a Market Perform rating on the stock. This adjustment comes after the company reported its first-quarter earnings, which showed a beat on Distributable Earnings (DE) and Fee-Related Earnings (FRE) but raised some concerns over the components contributing to these results.
The Carlyle Group's first-quarter performance included one-time items that positively impacted general and administrative expenses, leading to a better than expected FRE margin. Additionally, a lower tax rate during the quarter provided some benefit. Still, the firm's fundraising fell short of expectations, accumulating only $5.3 billion.
Despite management's positive outlook on the operating environment, attention was drawn to specific areas such as the European Collateralized Loan Obligation (CLO) business and the performance of Carlyle Partners VII, which is no longer in a position to generate carry.
The analyst from KBW noted that the stock's market reaction on the day seemed exaggerated and may have been influenced by investor positioning in anticipation of the earnings report. Following the quarterly results, KBW has decided to adjust its price target and earnings estimates for The Carlyle Group slightly downward.
The firm reiterated its Market Perform rating, indicating that the stock might perform in line with the broader market expectations. The revised price target of $48 reflects a modest decrease from the prior target, aligning with the latest financial outcomes and market conditions surrounding The Carlyle Group.
InvestingPro Insights
With The Carlyle Group's (NASDAQ:CG) recent earnings report in the spotlight, real-time data from InvestingPro provides additional context to the company's financial health and stock performance. The company's market capitalization stands at $14.36 billion, reflecting its significant presence in the market.
Despite a challenging quarter, The Carlyle Group maintains a dividend yield of 3.42%, showcasing its commitment to returning value to shareholders. This yield is particularly noteworthy considering the company's revenue has seen a decline of 33.6% over the last twelve months as of Q1 2024.
An InvestingPro Tip suggests closely monitoring the company's PEG ratio, which currently sits at an attractive 0.12, indicating potential for future earnings growth relative to its share price. Additionally, with the analyst consensus fair value at $49, which is above the current price, there may be an opportunity for investors considering the stock's recent performance.
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