Citing a “combination of recent stock performance, catalysts on the horizon, ongoing alternative asset manager trends and, among other things, valuation,” Credit Suisse analyst Andrew Kuske sees Brookfield Asset Management Inc. “poised for performance,” prompting him to raise his rating to “outperform” from “neutral.”
“On the year-to-date, BAM generally delivered a ‘middle-of-the-pack’ performance against some U.S. alternative asset managers, but a significant lag versus the Canadian banks (a relevant comp given index weights) with negative 17 per cent and negative 16.6 per cent on the NYSE and TSX lines, respectively,” he said. “With BAM’s continued re-packaging of the property portfolio, with potential alternative asset manager spin and continued favourable funds flow into the Canadian market, we believe a number of conditions exist for BAM’s outperformance.”
“Over the last few years, trends of declining interest rates along with ample liquidity generally helped boost asset valuations and supported robust capital markets for an elevated level of industry monetizations. The combination of rising rates, uneven economic impacts, inflationary pressures and, among other factors, growing concerns associated with recessionary conditions, collectively bode well for BAM’s global franchise.”
Mr. Kuske increased his target for Brookfield’s U.S.-listed shares to US$71.50 from US$68. The average is US$71.79.
“BAM’s core franchise and overall platform continues to be positively positioned on a longer-term basis. Most recently, the firm’s fund raising, deal deployment and monetizations collectively accelerated. Continued progress with these efforts, growth from the insurance business along with accelerated real estate re-packaging could result in upside to our existing forecasts and valuation,” he added.