, an analyst from BMO Capital, has initiated a new Buy rating on Blue Owl Capital (OWL).
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BMO Capital’s rating is based on several compelling factors that make Blue Owl Capital an attractive investment. Despite the challenges faced by credit-oriented managers, Blue Owl’s valuation has already adjusted to reflect these risks, providing a margin of safety. The firm’s perpetual assets under management (AUM) base, strong wealth management (WM) distribution, and earnings rich in fee-related earnings (FRE) are particularly appealing. Successful integration of recent acquisitions and demonstrating organic growth are crucial for a valuation recovery, which BMO Capital is optimistic about.
BMO Capital highlights Blue Owl’s unmatched leverage in the wealth management channel, with a significant portion of fundraising coming from private wealth, especially the registered investment advisor (RIA) market. This creates a stable and growing base of fee-paying AUM, supporting earnings potential. Furthermore, Blue Owl’s strategy to replicate the success of its real estate platform in the income-oriented investment products (IPI) space is expected to drive perpetual AUM growth at attractive fee rates. While the firm has diversified its capabilities through recent deals, BMO Capital expects a focus on integration to showcase organic growth and improve FRE margins, supporting their Buy rating.
In another report released on September 19, Bank of America Securities also maintained a Buy rating on the stock with a $29.00 price target.