Yahoo Finanza Investment Firm KKR’s Shares Hit Fresh High on Upbeat Earnings; Target Price $50
U.S.-based investment firm KKR & Co’s shares hit a fresh high on Monday after the company reported better-than-expected earnings in the fourth quarter of 2020, largely driven by a higher level of carried interest and an increase in transaction and management fees.
The company that manages multiple alternative asset classes said after-tax distributable earnings and after-tax distributable earnings per adjusted share were $431.1 million and $0.49, respectively, for the quarter ended December 31, 2020 and were $1,522.4 million and $1.78, respectively, for the full year ended December 31, 2020.
“KKR reported DE of $0.49 (Jefferies $0.46 / Consensus $0.41). Stronger than forecast transaction fees ($389M vs. $170M est) more than offset lower than forecast total realized income ($243M vs. $354M est). Book value per share ended the quarter at $23.09/sh, up 14% q/q and 20% ytd while accrued carry was up 37% q/q. KKR declared a dividend of $0.135 and intends to increase its regular annual dividend from$0.54 to $0.58,” noted Gerald E. O’Hara, equity analyst at Jefferies.
KKR said its after-tax distributable earnings per adjusted share of $0.49 and $1.78 for the quarter and full-year ended December 31, 2020, were up 11% and 6%, respectively, compared to the equivalent periods in 2019. That was also higher than the Wall Street consensus estimates of 0.41 per share. Distributable operating earnings were up 18% and 11% for the quarter and full-year ended December 31, 2020, respectively, compared to the equivalent periods in 2019.
The company formerly known as Kohlberg Kravis Roberts & Co said its Assets Under Management (AUM) and Fee-Paying Assets Under Management were $252 billion and $186 billion, up 15% and 16%, respectively, year-over-year, driven in part by record fundraising in 2020..
Following this upbeat result, KKR shares, which surged about 39% in 2020, hit a fresh high of $45.43 on Monday.
KKR Stock Price Forecast
Seven analysts who offered stock ratings for KKR in the last three months forecast the average price in 12 months at $46.00 with a high forecast of $50.00 and a low forecast of $39.00.
The average price target represents a 1.61% increase from the last price of $45.27. From those seven analysts, five rated “Buy”, two rated “Hold”, and none rate “Sell”, according to Tipranks.
Morgan Stanley gave a base target price of $43 with a high of $72 under a bull scenario and $19 under the worst-case scenario. The firm currently has an “Equal-weight” rating on the investment firm’s stock.
Several other analysts have also recently commented on the stock. Evercore ISI raised the target price to $44 from $40. BofA Global Research lowered the price objective to $47 from $48. BMO upped the target price to $54 from $45. Citigroup raised the price target to $53.5 from $53. Wells Fargo increased the target price to $46 from $45.
In addition, Jefferies upped the target price to $46 from $42. TheStreet upgraded KKR & Co. Inc. from a “c+” rating to a “b” rating. Deutsche Bank boosted their price target to $40 from $38 and gave the stock a “hold” rating. Zacks Investment Research raised to a “hold” rating from a “sell”.
Analyst Comments
“While we see an attractive organic asset growth trajectory, we also see a recessionary backdrop that raises risk to KKR‘s fee-related earnings growth story if fundraising slows, transaction fees stall, and costs don’t flex as performance fees and investment income decline,” said Michael Cyprys, equity analyst at Morgan Stanley.
“Recessionary backdrop raises risk of balance sheet marks and limited book value growth that could dampen prior ROE generation of mid-teens to 20%+. C-corp structure (as of July 1, 2018 ) with no K-1s should help expand the investor base over time.”
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This article was originally posted on FX Empire
