Last Update 12 Dec 25

Fair value Decreased 2.74%

OWL: AI Data Center Expansion Will Drive Long Term Upside Potential

The analyst price target for Blue Owl Capital has been trimmed to approximately $20.82 from about $21.40 as analysts factor in a slightly higher discount rate, modestly softer revenue growth assumptions, and mixed but fundamentally resilient takeaways from recent Q3 updates across the Street.

Analyst Commentary

Analysts are digesting Blue Owl Capital's Q3 results with a mix of optimism on long term growth and caution around near term execution and sentiment. The recent shifts in price targets reflect adjustments to modeled fundraising trajectories, earnings power, and perceived risk, rather than a wholesale change in the underlying thesis.

Bullish Takeaways

Bullish analysts highlight that core fundamentals remain intact, pointing to ongoing growth in key franchises and wealth channel strategies that support a premium valuation multiple over the medium term.
Despite near term volatility, some see the pullback after Q3 as an opportunity, arguing that long term fee related earnings growth and scalable platforms justify price targets that imply meaningful upside from current levels.
Expectations for a decent, if slower, fundraising quarter and continued inflows into wealth products underpin confidence in resilient organic growth, supporting an outlook for steady AUM expansion and operating leverage.
Supportive ratings, even alongside modest target cuts, suggest that the Street still views Blue Owl as a structural share gainer in alternative asset management, with execution on fundraising and product innovation key to re rating potential.

Bearish Takeaways

Bearish analysts note that successive price target reductions, including the move to $20 at JPMorgan, indicate a more cautious stance on near term revenue growth, fee rate durability, and capital formation momentum.
The stock's post earnings decline and sensitivity to external headlines highlight elevated sentiment risk, prompting some to build in a higher discount rate and more conservative multiple on forward earnings.
Expectations for quarter over quarter declines in fundraising, even if from strong levels, raise questions about the pace of future AUM growth and the timing of operating margin expansion.
Removal from select high conviction lists signals that, while the long term story is still respected, the risk reward profile is viewed as less asymmetric in the near term, putting more pressure on delivery against guidance and capital deployment targets.

What's in the News

Blue Owl is reconsidering a previously scrapped plan to merge two private credit funds, but may only revive the deal if the larger fund's share price improves, following investor backlash to the terminated merger (Reuters).
The firm recently called off its proposed merger of Blue Owl Capital Corporation II into Blue Owl Capital Corporation after investor concerns over restricted redemptions triggered a share price drop and broader questions about private credit liquidity (CNBC).
Blue Owl committed roughly $3 billion to a New Mexico data center tied to OpenAI's Stargate project, significantly increasing its exposure to AI driven digital infrastructure (The Information).
Funds managed by Blue Owl and Meta formed the Hyperion joint venture, a roughly $27 billion data center campus where Blue Owl holds an 80 percent stake, supported by a large debt financing to institutional bond investors (The Wall Street Journal; company filings).
Blue Owl's Stack Infrastructure unit has a major data center project in Santa Clara that remains unoccupied as it awaits full energization, highlighting infrastructure and power supply bottlenecks in key AI hubs (Bloomberg).

Valuation Changes

Fair Value: Trimmed slightly to approximately $20.82 from about $21.40. This reflects modestly higher perceived risk and softer growth assumptions.
Discount Rate: Edged up marginally to around 8.51 percent from roughly 8.49 percent. This implies a slightly higher required return for investors.
Revenue Growth: Reduced slightly to about 14.32 percent from roughly 14.41 percent. This signals a minor downgrade in medium term top line expectations.
Net Profit Margin: Nudged higher to approximately 44.89 percent from about 44.80 percent. This indicates a small improvement in projected profitability.
Future P/E: Compressed modestly to roughly 11.76x from about 12.07x. This suggests a slightly lower valuation multiple on forward earnings.

Strong growth in private credit, real assets, and fund strategies is driving stable recurring fees and margin expansion, positioning Blue Owl for future earnings growth.
Strategic acquisitions, international expansion, and partnerships are broadening access to private markets, enhancing platform scale and supporting sustainable revenue and earnings increases.
Heavy reliance on acquisitions, capital inflows, and concentrated markets exposes Blue Owl to integration, competition, compliance, and market cycle risks that threaten margins and growth.

Catalysts

About Blue Owl Capital

Operates as an alternative asset manager in the United States.What are the underlying business or industry changes driving this perspective?

Significant ongoing growth in permanent capital vehicles, particularly through expansion in private credit, real assets, and evergreen/interval fund strategies, is providing stable and recurring management fee revenue and positioning Blue Owl for higher future earnings and durable margin expansion.
Structural shifts away from traditional bank lending toward private lenders, combined with robust demand for alternative credit and asset-backed finance, are enabling large pipeline growth and high deployment opportunities, directly supporting future AUM growth and upward trajectory in revenues.
The broadening of access to private market products-recent partnerships for retirement plans (401(k) channel), international expansion, and consistently strong fundraising in both institutional and private wealth channels-expands the total addressable market, supporting long-term, sustainable increases in fee-related earnings.
Strategic, value-accretive acquisitions and efficient integration of real estate, digital infrastructure, and alternative credit businesses are driving increased platform scalability and generating synergies, which already underpin accelerating topline growth and are expected to improve net margins as integration benefits fully materialize.
Exceptional long-term opportunities in digital infrastructure, fueled by generational investment in data centers/AI-related assets where Blue Owl has industry leadership, are catalyzing large-scale fundraising and deployment, supporting robust growth in management fees and recurring revenues over the next several years.

Blue Owl Capital Earnings and Revenue Growth

Blue Owl Capital Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Blue Owl Capital's revenue will grow by 17.5% annually over the next 3 years.
Analysts assume that profit margins will increase from 2.9% today to 120.2% in 3 years time.
Analysts expect earnings to reach $5.1 billion (and earnings per share of $0.89) by about September 2028, up from $75.4 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 11.3x on those 2028 earnings, down from 153.5x today. This future PE is lower than the current PE for the US Capital Markets industry at 26.7x.
Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.38%, as per the Simply Wall St company report.

Blue Owl Capital Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Blue Owl's rapid expansion through acquisitions and new business lines increases execution and integration risk; if synergies from recent or future acquisitions do not materialize or integration is more costly or complex than anticipated, future net margins and earnings could be diluted.
The management emphasized that fundraising is "not linear" and noted significant reliance on strong, ongoing capital inflows-a slowdown during macro downturns, adverse market cycles, or rising rates could materially reduce revenues and DE growth.
Surging competition from both traditional managers (e.g., BlackRock, Brookfield) and private market peers in key segments like net lease, real assets, and private credit may lead to fee compression and erode Blue Owl's pricing power, threatening long-term revenue and margin expansion.
Concentration in U.S.-focused, middle-market direct lending, real estate, and digital infrastructure leaves Blue Owl exposed to regional or sector-specific slowdowns-especially if commercial real estate or leveraged loan markets undergo prolonged weakness, potentially impairing credit quality and causing higher losses or lower income.
An increasingly complex regulatory environment around private funds, retail and 401(k) access, and SEC disclosure may raise compliance and operating costs, reducing efficiency and putting downward pressure on net margins and earnings over the long term.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $23.917 for Blue Owl Capital 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 $29.0, and the most bearish reporting a price target of just $21.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $4.2 billion, earnings will come to $5.1 billion, and it would be trading on a PE ratio of 11.3x, assuming you use a discount rate of 8.4%.
Given the current share price of $17.78, the analyst price target of $23.92 is 25.7% 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.

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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.

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