KKR Buys Stake in French Software Group Cegid

Investment firm Silver Lake will remain Cegid’s majority shareholder.

Cegid, founded in 1983 and headquartered in Lyon, registered turnover of 498 million euros in 2020.

“Today’s investment reflects our continued strategic focus on investing in leading European software businesses and on backing French tech champions in their growth journeys,” KKR executives Jean-Pierre Saad and Jerome Nomme said in a joint statement.

($1 = 0.8206 euros)

(Reporting by Sudip Kar-GuptaEditing by David Goodman)

KKR to Buy UK’s John Laing for About $2.84 Billion

John Laing shareholders will be entitled to get 403 pence per share in cash, a premium of about 27% to the stock’s closing price on May 5, the day before the company confirmed it was in takeover talks with KKR.

John Laing plans to unanimously recommend to shareholders to back the deal, whose terms are considered to be fair and reasonable, it said.

KKR is a strong partner, providing long-term capital and global expertise to accelerate John Laing’s strategy,” said John Laing Chairman Will Samuel.

“This is particularly relevant in the current environment where there may be significant opportunities to invest in critical infrastructure which responds to public needs.”

($1 = 0.7046 pounds)

(Reporting by Yadarisa Shabong in Bengaluru; Editing by Arun Koyyur)

Investment Firm KKR Tops Earnings Estimates; Target Price $60

U.S.-based investment firm KKR & Co reported better-than-expected earnings in the first quarter of 2021, largely driven by a higher level of carried interest and an increase in transaction and management fees.

The company that manages multiple alternative asset classes said its after-tax distributable earnings rose 63% year-over-year to $660 million, or adjusted $0.75 per share, up from $406.3 million seen in the same period a year ago. That was higher than Wall Street’s expectations of $0.62 per share.

The company, which was formerly known as Kohlberg Kravis Roberts & Co, said its Assets Under Management (AUM) increased to $367 billion, up 77% year-over-year, with $15 billion of organic new capital raised in the quarter and $51 billion for the LTM period. The acquisition of Global Atlantic contributed $98 billion in 1Q’21.

KKR shares surged more than 38% so far this year. At the time of writing, the stock traded nearly flat at $56.09.

Analyst Comments

“Fee-related earnings of $364M compared to 1Q20 of $258M with transaction fees of $166M vs $98M y/y. The performance fee business recorded +$61M net of compensation which compared to +$138M in the prior-year period. Investment income, which reflects the balance sheet activities, totaled $392M vs. $128M in 1Q20. Ultimately, KKR generated +$660M of after-tax distributable earnings ($0.75/share) and declared a $0.145 dividend in the quarter,” noted Gerald E. O’Hara, equity analyst at Jefferies.

KKR Stock Price Forecast

Eleven analysts who offered stock ratings for KKR in the last three months forecast the average price in 12 months of $60.00 with a high forecast of $71.00 and a low forecast of $52.00.

The average price target represents a 7.50% increase from the last price of $55.82. Of those 11 analysts, eight rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $60 with a high of $92 under a bull scenario and $22 under the worst-case scenario. The firm gave an “Equal-weight” rating on the investment firm’s stock.

Several other analysts have also updated their stock outlook. KKR & Co. Inc. had its price objective lifted by Deutsche Bank to $52 from $47. They currently have a hold rating on the asset manager’s stock. BMO Capital Markets boosted their target price to $71 from $69. Credit Suisse Group boosted their target price to $60 from $53 and gave the company a neutral rating.

Analyst Comments

“Strong near-term growth with fundraising supercycle and GA accretion coming into earnings, but we see this reflected in the price at the current valuation for a more capital-intensive business model,” noted Michael Cyprys, equity analyst at Morgan Stanley.

“While strong investment performance could drive upward estimate revisions, we have less visibility on more episodic investment income gains. Mgmt’s increased focus on expanding the platform with adjacent strategies and scaling successor funds should drive higher fee-related earnings (FRE).”

Upside and Downside Risks

Risks to Upside: 1) Faster deployment with greater opportunity set. 2) Accelerated portfolio exit activity. 3) Stronger fundraising boosted by seeding of new strategies. 4) Large Insurance M&A – highlighted by Morgan Stanley.

Risks to Downside: 1) Volatile markets leading to weaker investment returns, balance sheet markdowns and delays harvesting of investments pressuring earnings. 2) Increased political and regulatory scrutiny of PE business model.

Check out FX Empire’s earnings calendar

Investment Firm KKR’s Shares Hit Fresh High on Upbeat Earnings; Target Price $50

U.S.-based investment firm KKR & Co’s shares hit a fresh high on Monday after the company reported better-than-expected earnings in the fourth quarter of 2020, largely driven by a higher level of carried interest and an increase in transaction and management fees.

The company that manages multiple alternative asset classes said after-tax distributable earnings and after-tax distributable earnings per adjusted share were $431.1 million and $0.49, respectively, for the quarter ended December 31, 2020 and were $1,522.4 million and $1.78, respectively, for the full year ended December 31, 2020.

KKR reported DE of $0.49 (Jefferies $0.46 / Consensus $0.41). Stronger than forecast transaction fees ($389M vs. $170M est) more than offset lower than forecast total realized income ($243M vs. $354M est). Book value per share ended the quarter at $23.09/sh, up 14% q/q and 20% ytd while accrued carry was up 37% q/q. KKR declared a dividend of $0.135 and intends to increase its regular annual dividend from$0.54 to $0.58,” noted Gerald E. O’Hara, equity analyst at Jefferies.

KKR said its after-tax distributable earnings per adjusted share of $0.49 and $1.78 for the quarter and full-year ended December 31, 2020, were up 11% and 6%, respectively, compared to the equivalent periods in 2019. That was also higher than the Wall Street consensus estimates of 0.41 per share. Distributable operating earnings were up 18% and 11% for the quarter and full-year ended December 31, 2020, respectively, compared to the equivalent periods in 2019.

The company formerly known as Kohlberg Kravis Roberts & Co said its Assets Under Management (AUM) and Fee-Paying Assets Under Management were $252 billion and $186 billion, up 15% and 16%, respectively, year-over-year, driven in part by record fundraising in 2020..

Following this upbeat result, KKR shares, which surged about 39% in 2020, hit a fresh high of $45.43 on Monday.

KKR Stock Price Forecast

Seven analysts who offered stock ratings for KKR in the last three months forecast the average price in 12 months at $46.00 with a high forecast of $50.00 and a low forecast of $39.00.

The average price target represents a 1.61% increase from the last price of $45.27. From those seven analysts, five rated “Buy”, two rated “Hold”, and none rate “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $43 with a high of $72 under a bull scenario and $19 under the worst-case scenario. The firm currently has an “Equal-weight” rating on the investment firm’s stock.

Several other analysts have also recently commented on the stock. Evercore ISI raised the target price to $44 from $40. BofA Global Research lowered the price objective to $47 from $48. BMO upped the target price to $54 from $45. Citigroup raised the price target to $53.5 from $53. Wells Fargo increased the target price to $46 from $45.

In addition, Jefferies upped the target price to $46 from $42. TheStreet upgraded KKR & Co. Inc. from a “c+” rating to a “b” rating. Deutsche Bank boosted their price target to $40 from $38 and gave the stock a “hold” rating. Zacks Investment Research raised to a “hold” rating from a “sell”.

Analyst Comments

“While we see an attractive organic asset growth trajectory, we also see a recessionary backdrop that raises risk to KKR‘s fee-related earnings growth story if fundraising slows, transaction fees stall, and costs don’t flex as performance fees and investment income decline,” said Michael Cyprys, equity analyst at Morgan Stanley.

“Recessionary backdrop raises risk of balance sheet marks and limited book value growth that could dampen prior ROE generation of mid-teens to 20%+. C-corp structure (as of July 1, 2018 ) with no K-1s should help expand the investor base over time.”

Check out FX Empire’s earnings calendar

Earnings to Watch Next Week: Twitter, General Motors, Coca-Cola, PepsiCo and Walt Disney in Focus

Earnings Calendar For The Week Of February 8

Monday (February 8)

IN THE SPOTLIGHT: KKR & Co.

KKR & Co Inc, an American global investment company that manages multiple alternative asset classes, is expected to post earnings of $0.41 per share for last quarter of 2020 with revenue of around $983.08 million. The U.S. private equity firm reported EPS of $0.44 per shares with revenue of $962.07 million in the same period a year ago.

“While we see an attractive organic asset growth trajectory, we also see a recessionary backdrop that raises risk to KKR‘s fee-related earnings growth story if fundraising slows, transaction fees stall, and costs don’t flex as performance fees and investment income decline,” noted Michael Cyprys, equity analyst at Morgan Stanley.

“Recessionary backdrop raises risk of balance sheet marks and limited book value growth that could dampen prior ROE generation of mid-teens to 20%+. C-corp structure (as of July 1, 2018 ) with no K-1s should help expand the investor base over time.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 8

Ticker Company EPS Forecast
GPN Global Payments $1.77
RCL Royal Caribbean Cruises -$5.04
SAIA Saia $1.29
ENR Energizer $0.89
HAS Hasbro $1.14
L Loews $0.74
CNA CNA Financial $0.99
DNB Dun & Bradstreet $0.26
AMG Affiliated Managers $3.68
CUB Cubic -$0.01
RAMP Liveramp Holdings Inc $0.07
BECN Beacon Roofing Supply $0.60
JKHY Jack Henry Associates $0.87
KKR KKR & Co LP $0.41
RE Everest Re $0.46
ACM AECOM $0.57
RGA Reinsurance Of America $1.10
OMF OneMain Holdings $1.98
VRNS Varonis Systems $0.12
LEG Leggett & Platt $0.70
SSD Simpson Manufacturing $0.66
AMKR Amkor Technology $0.35
BLKB Blackbaud $0.71
ESE ESCO Technologies $0.49
TTWO Take Two Interactive Software $0.94
NUAN Nuance Communications $0.19
CHGG Chegg $0.49
BAP Credicorp USA $1.60
HQY Healthequity Inc $0.31
CDK Cdk Global $0.68
CORT Corcept Therapeutics $0.17
SPG Simon Property Group $0.90
YALA Yalla $0.12
IX Orix $1.97
RBC Regal Beloit Corporation $1.58
TYOYY Taiyo Yuden ADR $2.47
MAURY Marui ADR $0.98
MELI MercadoLibre $0.39
OSH Oak Street Health -$0.23

 

Tuesday (February 9)

IN THE SPOTLIGHT: TWITTER

Twitter, an online social networking service that enables users to send and read short 140-character messages called “tweets”, is expected to report a profit of $0.25 in the fourth quarter, which represents year-over-year growth of 16% from the same quarter last year when the company reported $0.25 per share.

The social media company will report revenue of $1.19 billion, up over 17% from the year-ago quarter.

“Lack of Negative Revisions and Relative Valuation: Valuation continues to be expensive, but we think investors are likely to continue to pay a premium for TWTR given 1) continued turnaround progress and 2) platform scarcity,” said Brian Nowak, equity analyst at Morgan Stanley.

“Execution Risk Remains Around Driving Advertiser ROI: Advertiser ROI has clearly improved on Twitter, but the company needs to improve ad targeting and measurability to compete with the larger players. To do that it will have to further personalize the content that users see and use its data more effectively, both of which remain key strategic challenges (and priorities) for management.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 9

Ticker Company EPS Forecast
GT Goodyear Tire & Rubber $0.22
HBI Hanesbrands $0.29
WCC Wesco International $1.37
HAIN Hain Celestial $0.30
ARMK Aramark -$0.41
CNC Centene $0.47
GRA W.R. Grace $0.86
MAS Masco $0.74
SEE Sealed Air $0.78
INCY YTE $0.53
SPGI S&P Global Inc $2.54
JLL Jones Lang LaSalle $3.93
FOXA Twenty-First Century Fox -$0.06
IIVI Ii Vi $0.90
J Jacobs Engineering Group Inc $1.27
MLM Martin Marietta Materials $2.28
FIS Fidelity National Information Services $1.57
WLTW Willis $5.03
NVT nVent Electric PLC $0.42
AVNT Avient Corp $0.45
VSH Vishay Intertechnology $0.28
TDG TransDigm $1.99
IT Gartner $0.82
DD DuPont $0.85
CARR Carrier Global Corp $0.36
NRZ New Residential Investment $0.32
CVE Cenovus Energy USA -$0.06
ENPH Enphase Energy $0.41
AKAM Akamai $1.31
CCK Crown $1.27
THC Tenet Healthcare $1.79
NCR NCR $0.59
OI Owens-Illinois $0.34
HIW Highwoods Properties $0.47
EGP EastGroup Properties $0.61
FISV Fiserv $1.29
WELL Welltower Inc $0.13
UDR UDR $0.09
ACGL Arch Capital $0.38
TWTR Twitter $0.29
FMC FMC $1.47
BKH Black Hills $1.15
CNO CNO Financial Group $0.59
AIZ Assurant $2.07
DEI Douglas Emmett $0.01
PEAK Healthpeak Properties Inc $0.05
G Genpact $0.49
PRI Primerica $2.50
VOYA Voya Financial $1.45
YELP Yelp $0.00
CDAY Ceridian HCM Holding Inc $0.07
LYFT Lyft Inc -$0.72
CSCO Cisco Systems $0.76
MAT Mattel $0.23
QGEN Qiagen $0.65
EXC Exelon $0.73
EXAS Exact Sciences -$0.19
OMC Omnicom $1.63
AMX America Movil Sab De Cv Amx $0.40
VERX Vertex Inc. Cl A $0.07
OJIPY Oji ADR $1.62
RANJY Randstad Holdings $0.49
FOX Twenty First Century Fox -$0.06
KT KT $0.18
SHCAY Sharp ADR $0.08
COTY Coty $0.07

 

Wednesday (February 10)

IN THE SPOTLIGHT: GENERAL MOTORS, COCA-COLA

GENERAL MOTORS: the world’s largest auto manufacturers which ranked number 18 on the Fortune 500 rankings of the largest United States corporations by total revenue is expected to report a profit of $1.64 in the fourth quarter of 2020, which represents year-over-year growth of over 3000% from the same quarter last year when the company reported $0.05 per share.

The auto manufacturer will report revenue of $36.9 billion, up about 20% from the year-ago quarter.

“We are Overweight based on General Motors’ (GM) diversified portfolio, with multiple ways for GM to enhance shareholder value, through: EVs, ICE and Autonomy. GM also has leading North American margins, generates strong cash flow, and has a robust balance sheet,” wrote Joseph Moore, equity analyst at Morgan Stanley.

“We believe that the market is underestimating the SOTP of the GM enterprise via: 1) Legacy ICE, 2) GM EV, 3) GM‘s Ultium Battery business, 4) China JVs, 5) GM Finco, 6) GM Cruise, 7) hidden franchise value in brands such as Corvette and 8) GM Connected Services. GM management has a proven track record to allocate capital away from structurally challenged areas towards re-positioning the business model.”

COCA-COLA: The largest manufacturer, distributor and marketer of soft drink concentrates and syrups in the world is expected to report a profit of $0.42 in the fourth quarter of 2020, which represents a year-over-year decline of over 4.5% from the same quarter last year when the company reported $0.44 per share.

The auto manufacturer will report revenue of $8.74 billion, up about 4% from the year-ago quarter.

“We are Overweight on Coca-Cola (KO) after significant stock underperformance given COVID-19 impacts on KO‘s on-premise eating / drinking out business (~40% of sales) and gas & convenience (~10%) with gov’t mandated restaurant closures and reduced foot traffic. COVID impacts drove a large -26% organic sales decline in 2Q20, but trends improved to -MSD% in July/August and -LSD% in September/October. We forecast a recovery to ~8% organic growth in 2021/2022 with a post-COVID recovery in away-from-home,” said Dara Mohsenian, equity analyst at Morgan Stanley.

“We believe Coke‘s LT top-line growth outlook is above peers, with strong pricing power, and favourable strategy tweaks under Coke’s CEO, including increased innovation and a cultural shift towards a total beverage company.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 10

Ticker Company EPS Forecast
BDC Belden $0.77
PAG Penske Automotive $2.13
TMHC Taylor Morrison Home $0.82
CDW CDW $1.50
IPG Interpublic Of Companies $0.80
UAA Under Armour Inc -$0.07
CIM Chimera Investment $0.31
TEVA Teva Pharmaceutical Industries $0.63
GM General Motors $1.64
IQV IQVIA Holdings Inc $2.00
KO Coca-Cola $0.42
EEFT Euronet Worldwide $0.73
BG Bunge $1.77
CME CME $1.37
BXMT Blackstone Mortgage $0.60
CCJ Cameco USA -$0.04
HCSG Healthcare Services $0.29
AEIS Advanced Energy Industries $1.34
EFX Equifax $1.82
TRMB Trimble Navigation $0.51
EQC Equity Commonwealth $0.02
IRBT Irobot $0.20
ELY Callaway Golf -$0.21
EQIX Equinix $1.49
PACB Pacific Biosciences Of California $0.42
UBER Uber -$0.53
HP Helmerich & Payne -$0.79
TYL Tyler Technologies $1.42
KGC Kinross Gold USA $0.22
PAYC Paycom Software $0.79
WTS Watts Water Technologies $1.01
HR Healthcare Realty $0.04
QLYS Qualys $0.70
TTGT TechTarget $0.41
SLF Sun Life Financial USA $1.08
XPO XPO Logistics $0.68
EXEL Exelixis $0.05
BHF Brighthouse Financial Inc $2.65
AVLR Avalara Inc -$0.06
STAG STAG Industrial $0.08
IFF International Flavors Fragrances $1.19
MFC Manulife Financial USA $0.56
CPA Copa -$2.09
SONO Sonos Inc $0.85
NGVT Ingevity Corp $0.78
REXR Rexford Industrial Realty $0.07
FR First Industrial Realty $0.18
RUSHA Rush Enterprises $0.54
MC Moelis & Company $1.29
CINF Cincinnati Financial $1.19
EQR Equity Residential $0.25
SSNC SS&C Technologies $1.05
CERN Cerner $0.78
NLY Annaly Capital Management $0.29
MOH Molina Healthcare $1.14
AIN Albany International $0.66
WU Western Union $0.42
PDM Piedmont Office Realty $0.05
BE Bloom Energy Corp $0.00
MGM MGM Resorts International -$0.95
ZNGA Zynga $0.09
ASGN On Assignment $1.15
ORLY O’Reilly Automotive $5.09
WH Wyndham Hotels & Resorts Inc $0.04
SAVE Spirit Airlines -$1.43
COHR Coherent $0.78
PVG Pretium Resources $0.08
PRSP Perspecta Inc $0.52
GOCO Gocompare.Com $0.46
PS Pluralsight Inc -$0.02
PTVE Pactiv Evergreen $0.26
AMAT Applied Materials $1.27
NTAP NetApp $1.01
CF CF Industries $0.08
SPWR SunPower $0.10
UA Under Armour C share -$0.07
Z Zillow $0.28

 

Thursday (February 11)

IN THE SPOTLIGHT: PEPSICO, WALT DISNEY

PEPSICO: The company which holds approximately a 32% share of the U.S. soft drink industry is expected to report a profit of $1.45 in the fourth quarter of 2020. According to Zacks Research, analysts expect that PepsiCo will report full-year 2022 earnings of $5.51 per share, with EPS estimates ranging from $5.50 to $5.55.

The company also recently announced a quarterly dividend, which was paid on Thursday, January 7th.

“We are Overweight on PepsiCo (PEP). We forecast Pepsi will post superior topline growth relative to peers driven by exposure to the higher growth/higher margin snacks category (2/3 of PEP‘s profit). Snacks is a higher growth category given: (1) shift to snacking vs. sit-down meals; (2) less pressure from health/wellness vs. beverages, and (3) PEP’s leading share in snacks vs. fragmented competition, driving share gains, and higher margins/ROIC,” said Dara Mohsenian, equity analyst at Morgan Stanley.

“We also see more structural Pepsi market share benefits post COVID-19, as PEP uses its DSD distribution advantage, to gain shelf space and share in snacks, and in beverages, where PEP is advantaged vs competition with much lower mix in away-from-home.”

Walt Disney, a family entertainment company will post EPS of -$0.33 per share in the fiscal quarter.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 11

Ticker Company EPS Forecast
NNN National Retail Properties $0.65
MT Arcelormittal -$0.02
HII Huntington Ingalls Industries $4.56
TSN Tyson Foods $1.52
IRDM Iridium Communications -$0.08
PPC Pilgrim’s Pride $0.32
BWA Borgwarner $0.89
ZBRA Zebra Technologies $3.81
AZN Astrazeneca $0.55
PEP PepsiCo $1.45
FAF First American Financial $1.66
TAP Molson Coors Brewing $0.77
DUK Duke Energy $1.03
BAM Brookfield Asset Management USA $0.60
K Kellogg $0.89
NUS Nu Skin Enterprises $1.19
MAC Macerich -$0.12
THS TreeHouse Foods $1.07
KIM Kimco Realty $0.10
SON Sonoco Products $0.77
POOL Pool $0.76
LH Laboratory Of America $7.83
SSTK Shutterstock $0.52
GNRC Generac $1.97
R Ryder System $0.94
TPX Tempur Sealy International $0.51
KHC Kraft Heinz $0.73
NSIT Insights $1.50
SAFE 3 Sixty Risk $0.29
ALNY Alnylam Pharmaceuticals -$1.93
WSO Watsco $1.01
ILMN Illumina $1.10
NSP Insperity $0.30
ENS Enersys $1.19
MHK Mohawk Industries $2.87
DXCM Dexcom $0.93
TEX Terex $0.02
SPSC SPS Commerce $0.34
AEM Agnico Eagle Mines USA $0.64
CGNX Cognex $0.29
CUZ Cousins Properties $0.19
BIO Bio-Rad Laboratories $3.30
DLR Digital Realty $0.18
FWRD Forward Air $0.72
SGEN Seattle Genetics $0.89
DVA DaVita Healthcare Partners $1.91
CC Chemours Co $0.42
EXPE Expedia -$1.95
BRX Brixmor Property $0.05
SHO Sunstone Hotel Investors -$0.37
FRT Federal Realty Investment $0.28
REG Regency Centers $0.20
DIS Walt Disney -$0.33
VRSN Verisign $1.35
JCOM J2 Global $2.80
TWOU 2U -$0.09
RARE Ultragenyx Pharmaceutical -$1.06
NWE Northwestern $1.35
FLO Flowers Foods $0.24
TU Telus USA $0.19
NCMGY Newcrest Mining Ltd PK $0.59
CX Cemex Sab De Cv $0.02
SBGSY Schneider Electric SA $0.63
AEG Aegon $0.13
NVDA Nvidia $2.80
BCS Barclays $0.20
NICE Nice Systems $1.54
BFAM Bright Horizons Family Solutions -$0.24
AGIO Agios Pharmaceuticals -$1.41
ALKS ALKERMES $0.07
WST West Pharmaceutical Services $1.13
HTA Healthcare Of America $0.43
LPSN LivePerson -$0.01
DAVA Endava Ltd $0.35
JAMF Jamf $0.01
ALXO Alx Oncology Holdings Inc. -$0.39
OMAB Grupo Aeroportuario Del Centro Nort $0.23

 

Friday (February 12)

Ticker Company EPS Forecast
D Dominion Resources $0.76
HUN Huntsman $0.45
SXT Sensient Technologies $0.62
AIMC Altra Industrial Motion $0.69
LECO Lincoln Electric $1.06
PRLB Proto Labs $0.51
MCO Moody’s $1.94
NWL Newell Rubbermaid $0.48
WPC W. P. Carey $0.49
ENB Enbridge USA $0.46
AUY Yamana Gold USA $0.10
YMZBY Yamazaki Baking ADR $0.40

 

KKR to Sell its Epicor Software to Clayton, Dubilier & Rice for $4.7 Billion; Target Price $40

KKR & Co Inc, an American global investment company that manages multiple alternative asset classes, said it will sell its software business Epicor Software Corporation to Clayton, Dubilier & Rice in a $4.7 billion deal announced on Monday.

CD&R Operating Partner Jeff Hawn will serve as Chairman of the Epicor Board upon close of the transaction, expected later this year, the company said.

UBS Investment Bank is acting as financial advisor and Debevoise & Plimpton LLP as legal advisor to CD&R. Barclays is acting as lead financial advisor, BofA Securities and Jefferies LLC as financial advisors, and Simpson Thacher & Bartlett LLP as legal advisor to KKR and Epicor.

KKR shares closed 0.32% higher at $34.93 on Friday, the stock is up about 20% so far this year.

Executive comments

“Four years ago, we embarked on an ambitious product modernization journey together with Epicor and are incredibly proud of the successes that the company has achieved to date, particularly with its recent cloud releases,” remarked John Park, Chairman of the Epicor Board and Head of Americas Technology Private Equity at KKR.

“We are confident that CD&R will provide valuable support as the company continues these product- and customer- centric investments to accelerate growth in the cloud.”

KKR stock forecast

Twelve analysts forecast the average price in 12 months at $39.96 with a high forecast of $47.50 and a low forecast of $36.00. The average price target represents a 14.40% increase from the last price of $34.93. From those 12 analysts, nine rated “Buy”, three rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave a target price of $37 with a high of $63 under a bull-case scenario and $16 under the worst-case scenario. KKR & Co Inc had its price objective boosted by stock analysts at Credit Suisse Group to $38 from $34. The firm currently has a “neutral” rating on the asset manager’s stock.

Other equity analysts also recently updated their stock outlook. Oppenheimer lowered the price target to $39 from $40, BMO raised their price objective to $46 from $44, Citigroup upped their price forecast to $47.5 from $40, Wells Fargo increased their stock price target to $43 from $40 and KBW raised it to $43 from $41. Bank of America upped their target price to $40 from $36 and gave the stock a “buy” rating. At last, Keefe, Bruyette & Woods upped their target price to $41 from $34.

We think it is good to buy at the current level and target $40 as 50-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Analyst view

“While we see an attractive organic asset growth trajectory, we also see a recessionary backdrop that raises the risk to KKR’s fee-related earnings growth story if fundraising slows, transaction fees stall, and costs don’t flex as performance fees and investment income decline,” said Michael Cyprys, equity analyst at Morgan Stanley.

“Recessionary backdrop raises the risk of balance sheet marks and limited book value growth that could dampen prior ROE generation of mid-teens to 20%+. C-corp structure (as of July 1, 2018 ) with no K-1s should help expand the investor base over time,” he added.

Upside and Downside risks

Upside: 1) Faster deployment with greater opportunity set. 2) Accelerated portfolio exit activity. 3) Stronger fundraising boosted by seeding of new strategies. 4) Better balance sheet marks than feared – highlighted Morgan Stanley.

Downside: 1) Deeper recession that leads to weaker investment returns, balance sheet markdowns and delays harvesting of investments pressuring earnings. 2) Increased political and regulatory scrutiny of PE business model.

KKR Posts Flat Q2 Earnings, Assets Under Management Jump 8% to $222 Billion; Target Price $40

KKR & Co Inc, an American global investment company that manages multiple alternative asset classes, reported that its second-quarter after-tax distributable earnings per adjusted remained flat compared to last year and net income surged 36% to $698.6 million, sending its shares up over 2%.

U.S. private equity firm said its after-tax distributable earnings per adjusted share of $0.39 for the second quarter of 2020 are flat compared to the second quarter of 2019. Revenue for the quarter ended June rose to $1,332.0 million compared to $1,179.9 million last year.

The leading global investment firm said its revenues for the six months were $330.5 million compared to $2,367.3 million in Q2 2019. The decrease is primarily driven by mark-to-market net carried interest losses in the current period due to economic and market impacts of COVID-19 and a decrease in transaction fees.

U.S. private equity firm said its new capital raised in the quarter was $16 billion, a record quarterly figure for KKR, driven by fundraising across Asia Private Equity, Asia Infrastructure, Core Plus Real Estate and Dislocation strategies, the company said.

KKR said its assets under management and fee-paying assets under management rose 8% and 6% to $222 billion and $160 billion, respectively, over the last 12 months.

At the time of writing, KKR & Co shares were trading 2% higher at $36.49, up over 25% so far this year.

KKR & Co stock forecast

Thirteen analysts forecast the average price in 12 months at $37.38 with a high forecast of $41.00 and a low forecast of $30.00. The average price target represents a 3.89% increase from the last price of $35.98. From those 13, ten analyst rated ‘Buy’, three analysts rated ‘Hold’ and none rated ‘Sell’, according to Tipranks.

Morgan Stanley target price is $35 with a high of $55 under a bull scenario and $15 under the worst-case scenario. Credit Suisse raised its price target to $34 from $33.

Several other equity analysts have also updated their stock outlook. Citigroup raised the target price to $40 from $37.5. KKR & Co had its target price upped by Deutsche Bank to $32 from $31. KWB raised their target price to $41 from $34, Evercore ISI raised its target price to $38 from $34 and Jefferies upped it to $36 from $33.

We think it is good to buy at the current level and target at least $40 in the short-term as 100-day Moving Average and 100-200-day MACD Oscillator signal a strong buying opportunity.

Analyst comment

“While we see an attractive organic asset growth trajectory, we also see a recessionary backdrop that raises the risk to KKR’s fee-related earnings growth story if fundraising slows, transaction fees stall, and costs don’t flex as performance fees and investment income decline,” said Michael Cyprys, equity analyst at Morgan Stanley.

“Recessionary backdrop raises the risk of balance sheet marks and limited book value growth that could dampen prior ROE generation of mid-teens to 20%+. C-corp structure (as of July 1, 2018 ) with no K-1s should help expand the investor base over time,” he added.

Upside and Downside risks

Faster deployment with greater opportunity set; Accelerated portfolio exit activity; Stronger fundraising boosted by seeding of new strategies and Better balance sheet marks than feared, Morgan Stanley highlighted as upside risks to KKR & Co.

Deeper recession that leads to weaker investment returns, balance sheet markdowns and delays harvesting of investments pressuring earnings and increased political and regulatory scrutiny of PE business model, were the major downside risks.

KKR-led Group Invests $650 Million in Vietnam’s Property Developer Vinhomes

A group led by KKR, an American global investment firm, has invested $650 million in Vietnam’s largest property developer Vinhomes JSC, marking the deal one of the biggest private equity investments in south-east Asia.

KKR, a firm that manages investments across multiple asset classes, has said the deal underscores the attractiveness of Vietnam as an investment destination with strong economic growth projected this year when the whole world is battling with the novel coronavirus.

Vietnam has recorded zero COVID-19 death so far despite having a population of around 100 million.

Ashish Shastry, co-head of private equity for KKR Asia Pacific and head of Southeast Asia, said in a press release, “We are truly honored to have the opportunity to invest in a successful, leading business like Vinhomes which is an integral part of the consumer services ecosystem within the Vingroup family.

“This investment exemplifies the type of platinum brands and management teams KKR looks to work within Southeast Asia. Today’s announcement further underscores our strong commitment to Vietnam, where KKR has been active and present for nearly a decade.”

KKR has $207 billion in assets under management.

Singapore state-owned company Temasek Holdings, a partner in the consortium with KKR, has bought a total 6% stake in Vinhomes, a subsidiary of Vingroup.
Cherishing the announcement, Vinhomes shares closed 7% higher on Tuesday at 74,900.00 dong. A similar upside is expected from KKR in the U.S. session as well.

Nguyen Dieu Linh, chairwoman of Vinhomes said in a press release, “We are pleased to welcome KKR as a shareholder in Vinhomes, and believe that the investment demonstrates the confidence of international investors in Vinhomes, Vingroup and the Vietnamese market.

“As a reputable, world-class institution, KKR’s expertise and proven track record of helping companies achieve long-term success will be valuable as we work together to enhance value for Vinhomes shareholders.”

KKR shares closed 3.29% higher at $30.11 on Monday. The stock price has recovered all of its coronavirus -induced losses and gained over 3% so far this year.

According to Tipranks, ten analysts forecast the average price in 12 months at $31.89 with a high of $39.00 and a low of $21.00. The average price target represents a 5.91% increase from the last price of $30.11.

It is good to buy at the current level as 100-day Moving Average and 20-200-day MACD Oscillator signal a strong buy opportunity; target $33 in the near-term with a stop loss of around $27.