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Oppenheimer downgraded Blackstone (NYSE:BX) and Hamilton Lane (NASDAQ:HLNE) to Perform from Outperform after both stocks reached the firm's previous price targets of $105 and $98, respectively.
"Our earnings outlook is largely unchanged for both companies, as is our price target, which is 1.3x the market multiple based on as if fully taxed earnings for the asset management business," analyst Chris Kotowski wrote in a note to clients.
Note that from Sept. 30 to Jan. 10, Blackstone (BX) stock jumped 51% and Hamilton Lane (HLNE) surged 57% compared with the S&P 500's 22% gain during the period.
He remains bullish on the group of alternative asset managers — KKR (KKR), Hamilton Lane (HLNE), Blackstone (BX), and Ares Management (ARES) — "but our valuation discipline makes us downgrade BX and HLNE."
For the overall sector, Kotowski expects Q4 earnings to be uneventful "as monetizations and private equity fundraising remain constrained."
The setup for 2024 looks more promising, though. "Given the strength in equity markets we would expect exits/monetizations to accelerate in 2024 and that should ease up fundraising as well," he said. "The secular tailwinds for the group, we think, are as strong as ever."
Kotowski's Perform rating on Blackstone (BX) aligns with the SA Quant rating and the average SA Analyst rating, both at Hold, and diverges from the average Wall Street rating of Buy.
For Hamilton Lane (HLNE), the SA Quant rating flashes Sell, while the average Wall Street rating, at Hold, agrees with the Oppenheimer rating of Perform.
In Thursday morning trading, Blackstone (BX) fell 1.4% and Hamilton Lane (HLNE) dropped 2.1% against a backdrop of broader stock declines. For example, the S&P 500 -0.4% and the Financial Select Sector SPDR EFF (XLF) -0.8%.