UPDATE: StepStone Group (STEP) PT Raised to $48 at Morgan Stanley After 62% Earnings Beat

Morgan Stanley analyst Michael Cyprys raised the price target on StepStone Group (NASDAQ: STEP) to $48.00 (from $47.00) after the company reported a 62% earnings beat in C4Q20 that demonstrates embedded earnings power playing out over the next several years. Upside can come from execution on strong client asset growth driving topline management fee growth, margin
expansion, and performance fee generation.

The analyst reiterated the Overweight rating, stating "STEP's 62% earnings beat in C4Q20 demonstrates embedded earnings power that should play out over the next several years as management executes on strong client asset growth driving topline management fee growth, margin expansion, and performance fee generation. Over the next 5 years, we think STEP can deliver 18% EPS CAGR to $1.60, supported by 15% fee-paying AUM CAGR and 18% EBITDA CAGR to $213m (after NCI). This is not reflected in current valuation, with the shares trading at 27x CY2022 EBITDA. Our $48 price target for 28% upside is derived from a 5-yr discounted EV/EBITDA approach".

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