On Wednesday, TD Cowen adjusted its outlook on TPG Inc. (NASDAQ:TPG), raising the price target to $43.00 from $42.00, but maintained a Hold rating on the stock. The company’s assessment follows its second-quarter financial results and indicates a positive view on the company’s future asset raising activities.
TD Cowen’s report highlights the expectation of continued growth for TPG, especially given the new launches expected in the second quarter of 2025. These include Capital X and Health Care III, which will complement the existing Rise Climate, infrastructure and ongoing credit initiatives. The company expects these developments to contribute positively to TPG’s future performance.
According to TD Cowen, TPG’s fee-related revenue (FRE) margins are expected to improve even as the company faces higher expenses. This outlook suggests a favorable balance between revenue and expenses for TPG in the coming periods.
The company’s analysis does not foresee any material changes in the “core” distributable earnings (DE) estimates for 2024 and 2025. The decision to maintain the “Hold” rating is based on this stable outlook, with the price target only slightly increased to reflect the slightly improved expectations.
To summarize, TD Cowen’s updated price target reflects slightly increased confidence in TPG’s ability to expand its asset management operations and improve margins while managing increased expenses. The Hold rating means the firm advises investors to maintain their current position in TPG shares at this time.
In other recent news, TPG reported a GAAP net loss of $14 million for the second quarter of 2024. Despite this, the company showed strong momentum in fundraising, raising a significant $6.3 billion in capital during the quarter, with a large focus on credit strategies. Distributable after-tax earnings were a solid $207 million, or $0.49 per share of Class A common stock, and it plans to pay a dividend of $0.42 per share.
TPG has also successfully advanced investments and acquisitions, including the spin-out of Aareon and the acquisition of Untitled Entertainment. In addition, the company announced plans to expand its climate investment initiatives, with a goal of raising $10 billion for the Rise Climate Fund and the Global South Initiative.
Analysts noted that TPG is expected to raise around $40 billion from 2021 to 2025 through new strategies and expects growth in private equity and infrastructure fundraising. The firm also plans to expand its GP-led secondary business and expects an increase in fee-based assets under management in the lending business. These recent developments underscore TPG’s forward-looking business approach and commitment to capitalizing on market opportunities.
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