JPMorgan Resumes Apollo Global Management (APO) at Overweight

JPMorgan analyst Kenneth B. Worthington resumes coverage on Apollo Global Management (NYSE: APO) with a Overweight rating and a price target of $122.00.

The analyst comments "Following a period of restriction, we are moving to an Overweight rating on Apollo from a Not Rated designation with a $122 Dec 2024 price target. Our prior rating was Neutral. We see Apollo as among the better positioned publicly traded alternative asset managers to capitalize on secular trends such as the proliferation of private credit and an aging population needing reliable income for retirement. But Apollo is executing its insurance strategy in a different way than are peers, leveraging better investment returns to offer customers better annuity prices/yields to drive industry leading asset management and insurance sales/growth, but also funding this growth in a more capital-efficient manner. However, Apollo operates a balance sheet heavy business as punctuated by the acquisition/internalization of Athene. Despite a more capital-efficient model than insurance peers, it nonetheless operates a more capital-heavy model in strong contrast to alternative asset managers such as Blackstone and Ares that operate capital light. As a result credit quality , particularly if economic conditions or consumer health deteriorates, would likely influence investors’ perception of Apollo’s earnings power. Yet we are recommending Apollo with an Overweight rating as we see its leadership as particularly innovative and creative, with a business model that gives investors more of what they want: cheaper fee-related earnings funded by a more creative third party capital structure. We value Apollo using a sum-of-the-parts methodology, with an in-line valuation for asset management and premium insurance valuation leading us to a 12/2024 price target of $122."

For an analyst ratings summary and ratings history on Apollo Global Management click here. For more ratings news on Apollo Global Management click here.

Shares of Apollo Global Management closed at $110.82 yesterday.

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