Wells Fargo analyst Michael Brown maintained a Hold rating on KKR & Co (KKR – Research Report) yesterday and set a price target of $150.00.
Michael Brown has given his Hold rating due to a combination of factors surrounding KKR & Co’s recent financial activities. The company has initiated a substantial offering of Series D Mandatory Convertible Preferred Stock, aiming to raise $1.5 billion, with potential to increase to $1.725 billion. This capital is intended to fund expansions in their Strategic Holdings segment, which was previously announced, creating a timing mismatch that tempers the positive impact of the expansion news.
While KKR is recognized for its adept capital allocation and the potential for Distributable Earnings (DE) growth, the issuance introduces a 1.7% dilution effect on a full-year basis. Despite this, the raised capital suggests that further investments in Strategic Holdings are likely, indicating possible future growth. However, the immediate dilution and timing issues contribute to the Hold rating, as these factors present a mixed outlook for the stock’s near-term performance.
KKR’s price has also changed slightly for the past six months – from $117.670 to $120.780, which is a 2.64% increase.