KBW Initiates Brookfield Asset Mgmt At Outperform, $41 Target

Ann Dai of Keefe, Bruyette & Woods believes that there is meaningful potential for Brookfield Asset Management Inc BAM to grow its business, “as the secular demand for real assets remains strong and the company continues to expand its geographic and strategic footprint.”

Dai initiated coverage of the company with an Outperform rating and price target of $41.

Uniquely Positioned to Benefit

The analyst believes that Brookfield Asset Management is “uniquely positioned” to benefit from demand for its current capabilities via the listed partnerships that the company manages, as well as its rapidly growing public markets and private funds businesses.

The ownership of listed partnerships accounts for about 59 percent of Brookfield Asset Management’s market capitalization at the current prices.

Dai believes that “given the highly contracted and regulated nature of these businesses, they provide stability to BAM’s earnings.”

In addition, a majority of the earnings from the company’s growing third party asset management business is currently being driven by management fees, which Dai notes is “another relatively stable and sticky income stream.”

Leading Real Assets Manager

Dai mentioned that Brookfield Asset Management had fee-bearing capital under management of $114 billion, as of April 2016, along with balance sheet assets worth $79 billion, as of March 31, 2016.

“The company has, over the years, built out significant expertise in managing and operating real estate, renewable energy, infrastructure, and private equity businesses,” Dai stated, noting that the company “owns significant stakes in real asset operating entities that have substantial potential to grow.”