ARES: Fee Strength And Credit Competitiveness Will Drive Long-Term Performance

Analysts have slightly reduced their fair value estimate for Ares Management to $180.00 from $180.20. This change reflects recent adjustments to market expectations amid credit concerns, but ongoing support comes from strong investment activity and solid fee-related earnings.

Analyst Commentary

Recent Street research reveals a divided but nuanced outlook on Ares Management, with both optimistic and cautious observations regarding the firm's valuation, execution, and growth prospects.

Bullish Takeaways

• Several analysts have raised their price targets, reflecting confidence in Ares’ strong fundraising momentum and robust investment activity.
• Solid fee-related earnings and healthy underlying portfolio performance underpin a positive long-term growth narrative.
• The firm’s industry-leading private credit capabilities are highlighted as a competitive advantage, supporting continued expansion and resilience amid market shifts.
• Despite periodic shortfalls in realized performance income, the recurring nature of Ares’ revenue streams provides a stabilizing influence on valuation and execution.

Bearish Takeaways

• Credit concerns are expected to dominate near-term market valuations, tempering the outlook for swift growth reacceleration.
• Analysts note mounting competition and macroeconomic headwinds, which could pressure Ares’ risk/reward profile relative to peers.
• Some caution that returns may remain mixed and realizations muted in the upcoming quarter, potentially dampening overall earnings momentum.
• Others suggest that alternative asset managers may offer more compelling near-term upside, given current market dynamics and competitive challenges.

What's in the News

• EPIC Midstream, controlled by Ares Management, is exploring the sale of the EPIC Crude pipeline. The asset could be valued at around $3 billion, including debt. (Reuters)
• Ares Management has launched the Ares Core Infrastructure Fund (AUT), an Australian-domiciled unit trust that offers wholesale and retail clients access to its U.S.-regulated infrastructure investment platform. The fund reached approximately AUD 1.8 billion in assets under management as of July 1, 2025.
• During the period from April 1 to June 30, 2025, Ares Management did not repurchase any shares. The completed repurchase total remains at 400,000 shares valued at $10.45 million since the buyback program began in 2019.

Valuation Changes

• The Fair Value Estimate has been revised downward modestly, from $180.20 to $180.00 per share.
• The Discount Rate has decreased slightly, moving from 8.80% to 8.75%.
• The Revenue Growth projection has declined meaningfully, from 9.38% to 8.28%.
• The Net Profit Margin forecast has risen, increasing from 34.72% to 35.80%.
• The future P/E ratio estimate has edged down marginally, from 28.35x to 28.28x.