Raymond James on Monday upgraded Ares Management, L.P. (NYSE: ARES) from Market Perform to Strong Buy, setting a $157.00 price target that equates to an implied 20% upside from the stock's current trading level. The broker's decision follows a period of notable share-price turbulence; ARES shares have fallen by nearly 11% over the past week and were trading at $130.46 at the time of the update.
The upgrade is premised on a multi-year growth forecast that Raymond James expects will translate into consistent earnings expansion. The firm is modeling approximately 16-20% annual growth in fee-related earnings and 20-25% annual growth in realized income through year-end 2028. Those assumptions align with Ares' recent top-line strength, including 44% revenue growth over the last twelve months and a five-year revenue compound annual growth rate of 26%.
Valuation underpins part of the rationale. Raymond James applies a 24x price-to-earnings multiple to its 2026 earnings-per-share estimate to arrive at the $157.00 target. The bank derived that multiple from three-year historical averages of comparable fee-driven businesses. By contrast, the company currently trades at a price-to-earnings ratio of 76.29, which, according to InvestingPro's Fair Value assessment, indicates ARES is trading above historical valuation levels.
Beyond earnings and valuation, Raymond James highlighted the company's income-generating attributes, noting a common dividend yield of 4.1% versus the S&P 500's roughly 1% yield. That yield differential is cited as an additional element of the investment case.
Raymond James also pointed to several drivers supporting the growth outlook. The firm emphasized more than $100 billion of assets under management that are not yet generating fees, upcoming European Waterfall realizations, ongoing strong fundraising activity, and accelerated deployment as reasons why future earnings should be predictable. Supporting data shows five analysts recently revised their earnings estimates upward for the coming period, according to InvestingPro.
These bullish signals appear amid mixed operating results and other analyst adjustments. Ares reported fourth-quarter 2025 results that missed consensus, with earnings per share of $1.45 versus an expected $1.70 and revenue of $1.5 billion versus an expected $1.52 billion. Investor disappointment followed those figures.
Meanwhile, Goldman Sachs trimmed its price target on Ares Management from $189 to $165 but retained a Buy rating. Goldman also reduced its EPS estimates for 2025 through 2028 by 3%, attributing the change to a slightly lower management fee starting point and revised tax-rate guidance in the 11% to 15% range.
The Raymond James upgrade frames Ares Management as a fee-driven asset manager with near-term volatility but a multi-year growth profile supported by undrawn fee-bearing pools, realizations in Europe, and fundraising and deployment dynamics. The company's recent quarterly shortfall and Goldman Sachs' revisions temper the outlook and introduce near-term uncertainty even as Raymond James assigns a materially more constructive rating.
Summary and implications
Raymond James' move to Strong Buy rests on projected fee-related earnings and realized income growth through 2028, a historical record of strong revenue growth, and a dividend yield that exceeds the broader market average. Offsetting those positives are recent earnings and revenue misses and competing analyst adjustments that have lowered near-term earnings expectations.