Brookfield Business Partners L.P. (NYSE:BBU) is the listed vehicle for the private equity group Brookfield. Rebounding from a challenging macroeconomic environment in the second half of 2023, the stock’s valuation and upside potential captured analysts’ attention. With the stock up over 80% since last October, is it still a value stock? Or has the lion’s share of the upside already been captured? Based on analysts’ recommendations and the average price target, BBU stock could offer further upside potential.
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Brookfield Business Partners invests in, owns, and operates global business services, infrastructure services, construction, energy, and industrials (for example, Westinghouse, Clarios, Sagen, CDK Global, etc.).
Digging a Little Deeper
Headquartered in Hamilton, Bermuda, Brookfield Business Partners specializes in business services and industrial operations, spread over multiple sectors, including residential real estate, financial advisory services, facilities management, power generation, specialty metal and aggregates mining, and industrial manufacturing across the globe.
The post-COVID business environment has been tough, and the subsequent interest rate hikes have hit the company hard in large part due to its leveraged holdings. BBU saw its share price hit a high of $47.75 on January 4, 2022, and since then, the performance has been underwhelming, with the stock price dropping over 70% through October 31, 2023.
However, in early November 2023, Brookfield successfully completed the sale of Westinghouse, generating about $1.4 billion in proceeds from its 44% interest in the business. The company reported a solid Q4, with EBITDA slightly ahead of expectations. This catalyst event marked a turning point, with the share price experiencing a healthy rebound and several analysts reaffirming their bullish stance on the stock.
Recent analyst reports suggest more room to run, even as the stock is up by over 10% year-to-date. RBC Capital analyst Geoffrey Kwan reiterated a Buy rating on February 5, 2024, and raised the firm’s price target to $33 from $29, citing a disconnect between Brookfield’s net asset value and what could be a substantial valuation upside in the near term.
What is the Price Target for BBU in 2024?
Brookfield Business Partners has a Strong Buy consensus rating based on a Buy recommendation from three Wall Street analysts in the past three months. Their average price target is $27.45, with a high forecast of $30 and a low forecast of $24.36. This average price target represents a 19.8% upside from current levels.
Closing Thoughts
Brookfield Business Partners demonstrated a remarkable recovery in the second half of 2023, turning heads in the investment world as the stock surged over 80%. Its diversified investment portfolio, spanning business services, residential real estate, industrials, and more, has proven resilient in a challenging post-COVID environment. Despite a dip in share price, Brookfield made a strong comeback with critical milestones such as the successful sale of Westinghouse. The consensus among Wall Street analysts is a Strong Buy, with the potential for further upside.
