Last Update 14 May 26

Fair value Decreased 19%

ARES: Private Credit Sentiment Reset Will Support Future Earnings Resilience

Analysts have adjusted the Ares Management price target lower from about $218 to roughly $176, reflecting updated assumptions for growth, margins and future P/E, even as recent research shows a mix of target cuts and one increase across the Street.

Analyst Commentary

Recent research on Ares Management shows a cluster of target cuts from several firms, paired with a smaller set of more upbeat calls that focus on valuation support and the private credit franchise. The result is a mixed backdrop, where many analysts are recalibrating models while still highlighting potential upside if sentiment toward the sector improves.

Several reports point to private credit as a key swing factor. Some see headwinds for certain non traded vehicles and related fees, while others argue that pressure on the sector has gone too far and that Ares, with a large share of assets in private credit, could benefit if concerns ease. This split in opinion is showing up directly in target changes and in how analysts frame risk and reward for the stock.

Even among firms cutting targets, a few major houses emphasize that the reset is as much about sector wide assumptions and fee outlooks as it is about Ares itself. At the same time, a handful of bullish analysts highlight what they view as mispricing created by negative sentiment toward private credit, and position Ares alongside other large alternative managers as potential beneficiaries if flows or perceptions stabilize.

Goldman Sachs, for example, flags pressure on retail private credit flows at peers, but describes the impact on Ares as more limited compared with some competitors. Other research points out that broad concerns and what is described as misinformation around private credit have weighed on valuations across the group, including Ares, in ways some analysts see as disconnected from underlying platform strength.

Against this backdrop, the Street is effectively split between those focused on near term fee and earnings risk for the sector and those leaning into what they view as a reset that has pushed Ares too far down relative to its franchise and long term opportunity set in private credit and alternatives.

Bullish Takeaways

Bullish analysts argue that negative sentiment toward private credit has driven a de rating that has gone too far for Ares, creating what they see as a valuation gap versus the quality and scale of its platform.
Some bullish calls frame Ares as part of a group of credit heavy alternative managers that could benefit if concerns around non traded vehicles and private credit flows ease, which they view as a potential catalyst for higher earnings expectations and P/E support.
Major firms highlight what they describe as misinformation and sentiment driven selling across private credit, and present that pressure as an opportunity for investors who are comfortable with the asset class and the fee profile of large managers like Ares.
Goldman Sachs research cites Ares alongside other large managers but points to more limited exposure to the hardest hit retail private credit products, which bullish analysts see as helping support earnings resilience compared with peers that are more concentrated in those vehicles.

What's in the News

X-Energy IPO is reported as set to deliver sizable gains for Ares Management based on its investment in the company (Wall Street Journal).
Blue Owl shares fell after it capped withdrawals in two private credit funds, which has kept attention on retail flows and liquidity terms across private credit products, including at peers such as Ares (periodical report).
Ares completed a buyback program originally announced on February 14, 2019, repurchasing a total of 400,000 shares for US$10.45 million, or about 0.39% of shares. No additional shares were repurchased between October 1, 2025 and December 31, 2025.
Ares priced its second European Direct Lending CLO, EDL CLO II, at over €300 million, backed by directly originated loans from more than 70 middle market companies in Western Europe. It was described as one of the first multi currency middle market CLOs in Europe.
The Ares European Direct Lending strategy managed over US$84b in assets as of December 31, 2025, and Ares reported issuing 108 CLOs since 1999, with 72 active and about US$39b in CLO assets within roughly US$407b managed across the Ares Credit Group, underscoring the scale of its credit platform.

Valuation Changes

Fair Value: trimmed from $218.00 to about $175.66, reflecting a lower implied valuation level for the stock.
Discount Rate: adjusted slightly lower from 9.67% to about 9.28%, signaling a modest change in the required return used in the model.
Revenue Growth: raised from roughly 8.83% to about 11.40%, pointing to higher assumed top line expansion in the updated forecast.
Net Profit Margin: brought down from about 35.59% to roughly 31.79%, which reduces the earnings contribution from each $1 of revenue in the model.
Future P/E: cut from about 30.78x to roughly 21.90x, indicating a lower valuation multiple applied to projected earnings.

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Key Takeaways

Expanded executive leadership and strategic initiatives are expected to enhance resource allocation, driving growth and potentially boosting revenue and margins.
Global expansion and diversification into underserved markets aim to increase AUM and management fees, supporting sustained revenue growth.
The integration of recent acquisitions and reliance on fundraising momentum could strain revenue, especially amid economic shifts and rising expenses.

Catalysts

About Ares Management

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

Ares Management is poised to benefit from enhancements to its executive management team, where the appointment of co-presidents is expected to drive strategic and operational initiatives effectively. This leadership expansion could lead to better resource allocation and strategic growth, potentially enhancing revenue and net margins through increased efficiencies.
The company's global expansion strategy, underpinned by the addition of over 100 investment professionals in the past year, aims to address significantly underserved markets in private assets. This strategy is likely to boost assets under management (AUM) and management fees as they capitalize on a growing demand for alternative investments, driving revenue growth.
The acquisition of GCP International and the planned launch of several new funds across Japan, the U.S., and Europe, are expected to expand Ares Management's capabilities in the real assets and infrastructure sectors. This expansion should support higher AUM and fee-related earnings, contributing to overall earnings growth.
Ares Management is leveraging increasing retail and institutional investor allocations to alternative assets, with 65% of their 2024 fundraising coming from outside their campaign funds. The broadening of their capital base and increasing fundraising capabilities should enhance management fees and enable sustained revenue growth.
The substantial dry powder reserve of $133 billion positions Ares to capitalize on improving transaction environments and pent-up demand for private equity exits, enhancing net investment activity and revenue streams. This deployment potential is expected to drive fee-related earnings and realized income, translating into improved earnings forecasts.

Ares Management Earnings and Revenue Growth

Ares Management Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

This narrative explores a more optimistic perspective on Ares Management compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
The bullish analysts are assuming Ares Management's revenue will grow by 11.4% annually over the next 3 years.
The bullish analysts assume that profit margins will increase from 9.5% today to 31.8% in 3 years time.
The bullish analysts expect earnings to reach $2.6 billion (and earnings per share of $9.76) by about May 2029, up from $561.7 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $1.5 billion.
In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 21.9x on those 2029 earnings, down from 49.5x today. This future PE is lower than the current PE for the US Capital Markets industry at 41.8x.
The bullish analysts expect the number of shares outstanding to grow by 3.23% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 9.28%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

A shift in the economic environment could negatively affect deployment activities despite a current optimistic outlook, potentially resulting in slowed revenue growth.
There is significant reliance on continued fundraising momentum, particularly outside of campaign funds, which could strain future revenue flows if disrupted.
The integration of recent acquisitions like GCP International may pose operational challenges and could impact net earnings if expected synergies and growth are not realized within projected timelines.
Real estate market recovery, which is crucial for certain revenue streams, is contingent on favorable market conditions and could impact expected management fee growth if the market falters.
Rising supplemental distribution expenses associated with the expansion into wealth management products may drag on net margins, especially if fundraising does not keep pace with the anticipated expense growth.

Valuation

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

The assumed bullish price target for Ares Management is $175.66, which represents up to two standard deviations above the consensus price target of $145.71. This valuation is based on what can be assumed as the expectations of Ares Management's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $190.0, and the most bearish reporting a price target of just $125.0.
In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be $8.2 billion, earnings will come to $2.6 billion, and it would be trading on a PE ratio of 21.9x, assuming you use a discount rate of 9.3%.
Given the current share price of $123.18, the analyst price target of $175.66 is 29.9% 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

AnalystHighTarget 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 AnalystHighTarget 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 AnalystHighTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Leadership Appointments And Global Expansion Will Unlock Future Markets