Last Update06 Aug 25Fair value Increased 5.07%
Analysts have raised KKR's price target to $162.30, citing long-term growth opportunities in private wealth, credit, and insurance, improved macro conditions, and sector-wide optimism, despite some caution from bearish analysts regarding near-term performance.
Analyst Commentary
- Bullish analysts cite long-term structural growth opportunities in private wealth, credit, insurance, and capital markets as attractive drivers for KKR.
- Improved macroeconomic backdrop, including tariff de-escalation, equity market rally, and normalized volatility, is seen as supportive of capital markets recovery, benefiting KKR.
- KKR’s shares have underperformed year-to-date, creating a potential rebound opportunity according to bullish analysts.
- Recent adjustments to estimates across the alternative asset manager sector reflect increased optimism for fundamental trends in KKR's business lines.
- Bearish analysts express more measured near-term expectations, prompting a downgrade to Hold and a lower relative price target.
What's in the News
- KKR completed a share buyback, repurchasing 1,000,000 shares for $110 million, totaling 68.3 million shares (13.18%) for $1.94 billion under its 2015 buyback program.
- KKR and Capital Group are expanding their partnership to launch a U.S. public-private equity interval fund, aiming for a 2026 launch, to provide diversified access to public and private equity markets.
- KKR and Energy Capital Partners launched a $4 billion, 190MW data center campus in Texas, their first major U.S. AI infrastructure project through a $50 billion strategic partnership.
- KKR committed AUD 500 million to partner with CleanPeak Energy, supporting the growth of Australia's distributed solar and battery storage sector as part of its Global Climate Transition strategy.
- KKR is involved in multiple high-profile M&A discussions and bids, including: advanced talks to acquire ST Telemedia Global Data Centres, interest in Sensa Core Medical Instrumentation and Harley-Davidson’s financing unit, a potential acquisition of Italian healthcare firm GPI, attempts to exit JB Chemicals, and participation in possible deals across China (Dayao), New Zealand (Spark, Ritchies Transport), Japan (Taiyo Holdings, Sapporo Real Estate), Vietnam (Vinschool), and India (Relisys Medical Devices).
Valuation Changes
Summary of Valuation Changes for KKR
- The Consensus Analyst Price Target has risen from $154.47 to $162.30.
- The Discount Rate for KKR has risen from 8.55% to 9.05%.
- The Consensus Revenue Growth forecasts for KKR has risen slightly from -14.6% per annum to -14.0% per annum.
Key Takeaways
- Accelerating fundraising and diversification into credit and asset-based finance are driving stable, long-term earnings growth and expanding fee-related revenues.
- Strong positioning in private markets, tech investment, and a marked-up portfolio support higher future performance revenues, efficient scaling, and enhanced margins.
- KKR faces heightened earnings and margin risks from rapid alternative asset expansion, market competition, and regulatory or geopolitical headwinds undermining investment performance and fee stability.
Catalysts
About KKR- A private equity and real estate investment firm specializing in direct and fund of fund investments.
- Strong and accelerating fundraising momentum across asset classes-especially with institutional investors and the fast-growing private wealth/retail segment-are expanding fee-paying AUM and supporting double-digit management fee growth, with further upside from new distribution initiatives (e.g., partnership with Capital Group and insurance third-party capital). This is likely to positively impact future revenue and management fees.
- Expansion of credit and asset-based finance platforms, with KKR now a leader in a $6 trillion+ market poised for further growth, provides a broader and more durable base of fee-related earnings while also increasing the potential for performance fees as these businesses scale. This diversification reduces earnings volatility and supports long-term earnings growth.
- Secular shift towards private markets (less reliance on public markets by both companies and investors), together with KKR's global platform-particularly in Asia and alternative assets-positions the company to capture outsized deal flow and investment opportunities, enhancing both revenue growth and potential future carried interest income.
- Large embedded unrealized carried interest ($17B+ in gains, a record high) and a highly marked-up portfolio mean KKR is well-placed for significant future monetization activities, which could drive realized performance revenue and EPS as exits occur over the next several quarters and years.
- Ongoing investments in technology, digitization, and origination platforms (e.g., data analytics, AI adoption, 35 origination platforms in ABF and real estate) help KKR to scale efficiently, improve cost discipline, generate differentiated returns, and protect margins-contributing to higher net margins and return on equity over time.
KKR Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming KKR's revenue will decrease by 14.0% annually over the next 3 years.
- Analysts assume that profit margins will increase from 9.4% today to 39.6% in 3 years time.
- Analysts expect earnings to reach $5.4 billion (and earnings per share of $5.96) by about August 2028, up from $2.0 billion today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 35.1x on those 2028 earnings, down from 63.2x today. This future PE is greater than the current PE for the US Capital Markets industry at 26.8x.
- Analysts expect the number of shares outstanding to grow by 0.39% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 9.05%, as per the Simply Wall St company report.
KKR Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- KKR's rapid growth in asset-based finance (ABF) and private credit exposes it to potential asset quality and liquidity risks, especially if secular tailwinds slow or riskier deals underperform; this could lead to investment write-downs and impair earnings, impacting both net margins and realized returns.
- The fundraising momentum referenced in private markets and wealth channels may become challenged by heavy competition and potential fee compression as more asset managers enter alternatives and democratized products, putting long-term pressure on fee-related revenue and operating margins.
- Heavy reliance on performance income (carried interest) from monetizations and unrealized gains could lead to earnings volatility, especially if capital markets or strategic buyer appetite cools due to macro or regulatory changes, reducing the stability of net income.
- KKR's aggressive expansion into global and emerging markets, particularly through partnerships and joint ventures (e.g., with Energy Capital Partners and Japanese institutions), could face political risk, geopolitical instability, or regulatory tightening-potentially slowing AUM growth and reducing future management fees.
- Ongoing industry-wide growth in alternatives (private credit and ABF addressable markets expanding rapidly) risks fueling asset bubbles, overvaluation, and lower future returns, which could lead to disappointing long-term investment performance and lower carried interest and incentive fees for KKR.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $162.301 for KKR based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $187.0, and the most bearish reporting a price target of just $135.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $13.7 billion, earnings will come to $5.4 billion, and it would be trading on a PE ratio of 35.1x, assuming you use a discount rate of 9.1%.
- Given the current share price of $142.66, the analyst price target of $162.3 is 12.1% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
How well do narratives help inform your perspective?
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.