DigitalBridge Group Inc. (NYSE:DBRG) had its stock outlook revised Monday as Keefe, Bruyette & Woods changed its price target to $17.75, down from $18.50 previously. Despite this change, the firm maintained its Outperform rating on the company’s stock.
The adjustment followed a review of DigitalBridge’s financial model. Estimates for the second quarter were revised downward to $0.05 from $0.11, attributing the change to the timing of investor recovery fees. Additionally, estimates for the second quarter were cut by 3% due to lower revenue expectations.
Keefe, Bruyette & Woods forecast continued growth for DigitalBridge, forecasting net fee-based assets under management (FEEUM) growth of $4-4.5 billion, or an annual increase of 10-13%. They also expect a fee-related profit margin (FRE) of 35-40% and FRE growth of 15-20%.
The company’s analysis suggests that while the shares are considered fairly valued based on current earnings, significant upside potential is expected as FEEUM and earnings grow. Keefe, Bruyette & Woods acknowledged slower-than-expected growth and first-quarter earnings but expressed a positive outlook on DigitalBridge’s digital infrastructure strategy. They expect the company’s momentum to improve significantly in the second half of 2024 and 2025.
In other recent news, DigitalBridge Group Inc. reported robust first-quarter earnings growth, highlighting a 17% increase in fee-based net assets under management (FEEUM) to $32.5 billion and a 21% surge in commission revenue at $72.8 million. This growth has been largely driven by the company’s strategic focus on data center energy solutions, with more than 2 gigawatts under construction and a pipeline exceeding 5 gigawatts. Truist Securities and RBC Capital, however, revised their price targets for DigitalBridge to $19 from previously, while maintaining a positive outlook on the company’s stock.
Insights from InvestingPro
As DigitalBridge Group Inc. (NYSE:DBRG) goes through its financial reviews, InvestingPro insights show a mixed valuation and performance picture. The company is currently trading at a low valuation multiple of EBIT, which could represent an attractive entry point for investors looking for undervalued opportunities. Additionally, DigitalBridge also trades at low multiples of EBITDA and earnings, reinforcing the perception that the stock is potentially undervalued.
However, investors need to be aware of the challenges ahead. Analysts expect sales to decline in the current year, and net profit is also expected to decline. These forecasts are important for assessing the company’s short-term financial health. Additionally, given that the stock has been trading near 52-week lows and has suffered notable price declines over the past three months, investor sentiment appears cautious.
On the bright side, DigitalBridge’s cash flows are believed to be sufficient to cover interest payments, which is a reassuring sign of financial stability. For those interested in the company’s long-term prospects, the current market valuation may represent a unique opportunity, especially when considering the substantial revenue growth over the trailing twelve months starting from the first quarter of 2024, which stands at impressive 82.22%.
For a deeper analysis of DigitalBridge’s financial data and to access other InvestingPro insights, visit InvestingPro. Subscribers can find more than 15 additional recommendations to guide their investment decisions. Take advantage of the exclusive offer with the coupon code PRONEWS24 to get an additional 10% discount on an annual or two-year Pro and Pro+ subscription.
This article was generated and translated with the support of artificial intelligence and reviewed by an editor. For further information, please see our T&Cs.
