27% profit every 20 days?
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After gaining nearly 75 percent over the past year, Apollo Global Management LLC (NYSE:APO)'s stock still has plenty of runway ahead in 2018, according to Wall Street's latest bullish analyst.
The Analyst
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Morgan Stanley's Michael Cyprys upgraded Apollo Global's stock rating from Equal-weight to Overweight with a price target boosted from $32 to $42.
The Thesis
Shares of Apollo Global re-rated higher throughout 2017, but in 2018 the bullish case will continue due to the company's growth prospects, a credit business scaling faster than expected, new initiatives in the pipeline and the company entering a "portfolio harvesting stage," Cyprys said in the Wednesday note. (See the analyst's track record here.)
Alternative asset managers like Apollo Global are operating in a "Goldilocks environment" that will be supportive of earnings growth, Cyprys said.
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Apollo is expected to double its credit business over the coming three years from its current $157 billion assets under management to roughly $300 billion by 2020, according to Morgan Stanley. Earnings from the credit segment can double from $471 million in 2017 to $954 million in 2020, the analyst said. Some of the initiatives Apollo is focusing on include infrastructure and real estate-themed products and vehicles, Cyprys said.
Morgan Stanley's new $42 price target is based on a sum-of-the-parts valuation and implies an 11.5x multiple on 2019 estimated EPS, which is a 25-percent premium to the historical valuation of 9.2x. The company deserves a premium valuation given its accelerating growth and new initiatives, Cyprys said.
Price Action
Shares of Apollo Global gained more than 1 percent early Wednesday morning.
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27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.