Private equity and real estate investment firm KKR & Co. Inc. (NYSE: KKR) specializes in direct and fund of fund investments, including acquisitions, leveraged buyouts, credit and other investments. The company’s market cap is around $37.8 billion.
Deutsche Bank has rated the stock a Buy and lowered the $68 price target to $60. Fee-related earnings are projected at around 13 times P/E and spread-related earnings at about six times P/E. The analyst notes downside risks including investors’ failure to “embrace” KKR’s balance sheet strategy and saddle the firm with a higher P/E multiple, substantial losses on balance sheet investments, higher corporate taxes and unfriendly regulation.
KKR reports quarterly results late this month or early next, and consensus estimates call for revenue of $1.54 billion, down 13.7% sequentially, and EPS of $0.86 down 9.7% sequentially. The consensus price target is $65, and the 52-week trading range is $41.77 to $83.90. KKR pays a dividend yield of 1.4%, and the payout ratio for the past 12 months is 51.4%.
TPG Inc. (NASDAQ: TPG) offers investment management services to unconsolidated funds, collateralized loan obligations and other vehicles; monitoring services to portfolio companies; advisory services, debt and equity arrangements, and underwriting and placement services; and capital structuring and other advisory services to portfolio companies. The firm’s market cap is about $8.7 billion.
Deutsche Bank analysts have a Buy rating but lowered the price target from $45 to $40. The analysts expect fee-related earnings of 24 times P/E over the next three years. Threats to that forecast include the inability to increase capital inflows, slow product expansion, weaker-than-expected investment performance and failure to diversify.
TPG reports quarterly results on November 9, and consensus estimates call for EPS of $0.41 down 21.7% sequentially, and revenue of $313.1 million, up 22.4% sequentially. The consensus price target is $32, and the 52-week trading range is $23.09 to $35.40. TPG pays a dividend yield of 5.5%, and the firm’s payout ratio for the past year was 25.4%.
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