Blue Owl Capital (NYSE:OWL) saw its shares fall 1% on Tuesday after Deutsche Bank cut its recommendation to Hold from Buy and lowered the firm's price target to $10 from $15.
The stock had closed at $10.44 on Monday and has lost about 31% of its value over the past month. Deutsche Bank's new $10 target sits slightly below the most recent closing price.
Deutsche Bank analyst Brian Bedell reduced his forecasts for alternative asset managers, pointing to a more difficult environment for net flows into retail credit products in the near term. Bedell singled out elevated investor anxiety - which he tied in part to ongoing headlines in the sector - as a likely catalyst for both increased redemption requests and weaker new sales for many retail credit offerings.
Bedell expects these headwinds to remain in place for at least the next one to two quarters. He described conditions that would be necessary for a recovery in flows, noting that any improvement would require a slowdown in adverse headlines, an absence of new emerging private credit defaults, and a restoration of investor risk appetite.
According to Bedell, Blue Owl is more exposed to these pressures than some of its peers because a larger share of its fee-paying assets under management comes from retail private credit vehicles. That composition, the analyst said, could leave the firm more vulnerable to elevated redemption activity tied to sector headlines.
The downgrade by Deutsche Bank reflects revisions that assume a slower pace of long-term fee-related earnings growth for Blue Owl. The bank also applied notable negative revisions to several other alternative managers, including Blackstone, Ares Management, and TPG. Revisions for Carlyle, Apollo Global Management, and Brookfield Asset Management were characterized as less severe.
Sector implications - The analyst's note highlights pressures in the retail credit segment of the alternative asset management industry and suggests potential impacts on fee revenue trajectories across managers with material retail private credit exposure.
Market context - The combination of a lower price target and a Hold rating implies reduced near-term upside expectations from Deutsche Bank, reflecting the firm's reassessment of flow dynamics and fee growth prospects.