Market Overview

Morgan Stanley Says Buying The Dip In The Carlyle Group Could Bring 50% Return

Share:
Morgan Stanley Says Buying The Dip In The Carlyle Group Could Bring 50% Return

Weighing in the prospects of The Carlyle Group LP (NASDAQ: CG) raising the largest ever North American dedicated buyout fund — and the stock's recent underpeformance — one analyst sees a possible 50-percent return in shares of the company. 

The Analyst

Morgan Stanley analyst Michael Cyprys maintained an Overweight rating and $28 price target for the shares of the company.

The Thesis

Carlyle's flagship North American buyout fund is close to reaching a cap of $18.5 billion, exceeding the $15 billion target suggested by a recent Bloomberg article, analyst Cyprys said in a Monday note. Carlyle recently guided toward fourth quarter fundraising of 2.5 times the level seen during the third quarter, suggesting a total of about $18 billion, Cyprys said. 

With an estimated $6 billion raised by Carlyle's Europe and Asia buyout funds, Cyprys estimates that Carlyle now has $30 billion of global corporate private equity buying power — $5 billion more than the largest global buyout fund, namely Apollo Investment Corp. (NASDAQ: AINV)'s $24.6-billion Fund IX.

"This fundraising, much of which should close during 4Q17, should give investors increased confidence in CG's ability to hit and possibly exceed its $100b target," the analyst said. 

Morgan Stanley projects that the fundraising will drive revenue growth and margin expansion in the second half of 2018 and into 2019. With this catalyst ahead, the firm sees the recent weakness in the company's shares (a 15.5-percent pullback since the company's announcement of the management transition) as a buying opportunity.

The Price Action

Carlyle shares are up about 32 percent year-to-date, although they have lost about 19 percent from an early October intra-day high of $24.85.

Related Links:

Bank Of America Breaks Down The Brokerage Sector

Can Private Equity Interest Revitalize Buffalo Wild Wings?

Latest Ratings for CG

DateFirmActionFromTo
Oct 2020Morgan StanleyMaintainsEqual-Weight
Oct 2020CitigroupUpgradesNeutralBuy
Aug 2020Morgan StanleyMaintainsEqual-Weight

View More Analyst Ratings for CG
View the Latest Analyst Ratings

 

Related Articles (CG)

View Comments and Join the Discussion!

Posted-In: buyouts Michael Cyprys Morgan StanleyAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
ZZZScotiaBankMaintains27.0
FSVScotiaBankMaintains128.0
FNScotiaBankMaintains38.0
CSUScotiaBankMaintains1,600.0
CXOScotiaBankDowngrades43.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com