Raymond James believes Blue Owl Capital’s stock price could recover from its year-to-date losses. Analyst Wilma Bardis double-upgraded the alternative investment manager from market performer to strong buy. He also set a price target of $20, which represents 20% upside. “OWL’s forward P/E ratio is approximately 17x, compared to a three-year average of approximately 19x and 20-30x for peers with fee-related earnings (FRE) business models,” Bardis wrote. “We believe today’s low valuation is driven by several factors that we expect to ease in the near term.” However, analysts believe the company’s redemption risk is manageable as Owl Capital is likely to meet all demands, which will help eliminate the stock price overhang. OWL YTD Mountain OWL YTD Chart “OWL’s funds maintain sufficient liquidity to meet multi-quarter redemption requests,” she wrote, adding that she does not expect these redemption increases to have a material impact on management fees or assets under management. Meanwhile, the company’s fundraising is progressing smoothly despite the fluctuations. Mr. Bardis noted that from October 1 to December 1, Owl closed an estimated $4.3 billion in total capital across evergreen non-traded products. This was up from $3.4 billion in the previous quarter. The analyst added that negative headlines about private credit and the recently failed merger of two private credit funds “appear to be overblown” as Oulu Capital’s credit metrics appear to remain strong. Overall, Raymond James believes it will continue to maintain credit metrics that are “better than the industry average.” After the rating change, the stock price rose more than 2%. Blue Owl is down 28% this year.
