New York-based Apollo Global Management, Inc. (APO) is a private equity firm that specializes in investments in credit, private equity, infrastructure, secondaries, and real estate markets. Valued at a market cap of $96.7 billion, the company employs a combination of contrarian, value, and distressed strategies to make its investments.
This asset management company’s shares have massively outpaced the broader market over the past 52 weeks. APO has rallied 68.3% over this time frame, while the broader S&P 500 Index ($SPX) has gained nearly 22.7%. Moreover, the stock is up 3.5% on a YTD basis, compared to SPX’s 2.7% rise during the same time frame.
Zooming in further, APO has outperformed the Financial Select Sector SPDR Fund’s (XLF) 31.2% return over the past 52 weeks but has lagged behind XLF’s 6.5% rise on a YTD basis.
On November 5, Apollo Global Management reported its Q3 earnings results, which triggered a strong market reaction. Shares of APO surged 7.1% on the day of the announcement, followed by an additional 9.6% rally the next day. The company delivered adjusted net income of $1.85 per share and revenues of $7.8 billion, up 199.5% from the year-ago quarter. Strong performance across all of its segments aided the results. Moreover, fee-earnings AUM increased 18% on a year-over-year basis to $551 billion, while its Total AUM reached $733 billion, benefiting from inflows of $42 billion in the third quarter. This might have further bolstered investor confidence.
Moreover, on Nov. 11, shares of APO closed up 2.9% due to investor optimism surrounding Apollo and Mubadala Investment Company’s announcement of an extension of their multi-billion-dollar partnership focused on global origination opportunities. This strategic move is expected to further boost Apollo’s Capital Solutions business and augment its ability to originate investment opportunities across asset classes.
For the fiscal year, which ended in December, analysts expect APO’s EPS to grow 9.3% year over year to $6.67. The company’s earnings surprise history is disappointing. It surpassed the Wall Street estimates in one of the last four quarters while missing on three other occasions.
Among the 21 analysts covering the stock, the consensus rating is a “Strong Buy,” which is based on 15 “Strong Buy,” one “Moderate Buy,” and five “Hold” ratings.
This configuration is slightly more bullish than three months ago, with 14 analysts suggesting a “Strong Buy” rating.
On Dec. 9, Barclays analyst Benjamin Budish maintained an “Overweight” rating on APO and raised its price target to $200, which indicates a 17% potential upside from the current levels.
The mean price target of $185.05 represents an 8.2% upside from APO’s current price levels, while the Street-high price target of $227 suggests an upside potential of 32.8%.
