ARES - Ares Management downgraded to Equal Weight at Wells Fargo

2023-06-12 09:25:32 ET

• Wells Fargo downgraded alternative asset manager Ares Management ( NYSE: ARES ) to Equal Weight from Overweight on Monday as the analyst sees the firm's favorable factors already priced in.
• "The stock increasingly feels priced for perfection even as tailwinds for private credit may start to weaken," the firm's analyst wrote in a report to clients.
• Ares Management ( ARES ) stock slipped 0.6% in premarket trading.
• Positives for Ares ( ARES ) include: built-in growth via dry powder, "interesting iron in the fire", and magin expansion.
• Risks to the downside: Deteriorating economic backdrop; development of negative sentiment toward financial stocks in general; material deterioration in Ares's ( ARES ) investment fund performance; and slower-than-expected progress in its retail channel.
• Upside risks: Improvement in Direct Lending; improved fund returns as a benefit to FRPR levels; and faster-than-expected fee related earnings growth through particularly rapid margin expansion.
• The Equal Weight rating aligns with the SA Quant rating of Hold and diverges from th e average Sell-Side rating of Buy. The SA Analyst rating consensus is also Buy.
• SA analyst Vlad Deshkovich says Ares's ( ARES ) credit competency makes it a sector standout

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