Blue Owl Capital remains recommended as a buy as institutional demand for alternative assets remains strong, according to a report released Monday by TD Cowen. Still, analysts led by Bill Katz wrote that asset managers’ near-term performance is likely to be volatile through Labor Day “reflecting higher redemption cycles and the impact on earnings.” TD Cowen reiterated his buy status for Blue Owl, but lowered his 12-month price target to $14 from $16, implying an upside of about 54% from Friday’s closing price. “Investors are effectively pricing in (at least) the complete disappearance of OWL’s $35 billion (in NAV) evergreen complex…expect near-term price declines,” analyst Bill Katz said in a note Monday. Blue Owl’s stock price fell nearly 6% on February 20 after the company sold $1.4 billion in loan assets in three private funds and permanently restricted withdrawals from one retail fund. Blue Owl Capital Corporation II, which suspended quarterly redemptions, accounted for the largest portion of the sale. Blue Owl’s actions helped fuel investor fears about the risks in the nearly $2 trillion private credit market. As a result, new investors may be hesitant to allocate capital to funds managed by Blue Owl, while existing investors are likely to continue exiting some businesses, TD Cowen said. “Tactically, we expect OCIC/OTIC redemptions to continue to rise, but private credit headline noise may delay entry into 401(k)s,” Katz wrote, referring to Blue Owl Credit Income Corporation (OCIC) and Blue Owl Technology Income Corporation (OTIC). TD Cowen analysts say Blue Owl co-CEO Doug Ostrober last week provided some encouraging updates on the asset manager’s outlook across real assets, including data centers. The executive also maintained that institutional demand for high-growth alternative assets remains strong. TD Cowen argues that the 9.9% dividend yield helps support the stock price, and that even at a multiple of 20x the rest of the company, there’s still about $15 worth of value left in the stock. Blue Owl’s fund “has demonstrated sufficient liquidity even under extreme scenarios, suggesting that OWL will not result in a ‘forced sale’ of assets,” Katz said. TD Cowen matches the streetscape. Three-quarters of the 16 analysts covering Blue Owl rate the stock a “buy” or “strong buy,” according to LSEG data. Blue Owl has fallen nearly 13% over the past month, starting around the time it restricted withdrawals from one of its funds. OWL 1M Mountain Blue Owl’s stock price has fallen nearly 13% since the company restricted withdrawals from one of its retail-focused bond funds.
