KKR’s 3Q Sales Soar 140%; Analyst Stays Bullish

Global buyout firm, KKR & Co. reported strong 3Q results. Its revenues of $1.9 billion surged about 140% year-over-year, reflecting 256% jump in capital allocation-based income and a 35% growth in fees and other income.

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KKR’s (KKR) after-tax distributable earnings of $0.48 per share increased 4% in 3Q on a year-over-year basis and came ahead of the Street consensus of $0.40.

KKR’s asset under management stood at $234 billion, up from $222 billion in the year-ago quarter, driven by an increase in the value of private markets and public markets portfolios. The firm’s book value per adjusted share rose 5% year-over-year to $20.26, led by appreciation in the value of its investment portfolio and strong after-tax distributable earnings.

KKR’s co-chairmen and co-CEOs, Henry R. Kravis and George R. Roberts, said “In addition to strong investment performance and continued book value growth, 2020 is on pace to be the most active deployment and fundraising year in our history.” (See KKR stock analysis on TipRanks).

Following the results, Oppenheimer analyst Chris Kotowski maintained his Buy rating and a price target of $42 (about 23% upside potential). The analyst said that “capital markets fees have proven to be a sizable contribution to total fee revenues on an annual basis with great upside potential to already strong FRE [fee-related earnings] and performance revenues.” He also believes that the company will generate “performance fees for 2021E and beyond.”

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 6 Buys and 3 Holds. The average price target of $41.11 implies upside potential of about 20.4% to current levels. Shares are up by 17.1% year-to-date.