StepStone's stock rises after J.P. Morgan upgrades asset manger to overweight

By Steve Gelsi

Analyst praises prospects for investment manager's wealth unit and private-markets fundraising

Shares of private-markets investment manager and data provider StepStone Group Inc. rose 5.4% on Thursday after the stock drew an upgrade to overweight from neutral at J.P. Morgan on Thursday on growth expectations for the sector.

Analyst Kenneth Worthington hiked his price target for StepStone (STEP) to $49 from $40 and said prospects have brightened for the company's capital-raising activities.

"After a period of a more challenging fundraising combined with some idiosyncratic issues ... we now see a period of higher fee-paying assets under management (FPAUM) and see greater FPAUM growth in 2024," Worthington said in a research note.

The company also offers the potential for further success in its wealth-management business, "where the combination of innovation and more products in market position StepStone well in 2024 and beyond," Worthington said.

StepStone plans to raise its three flagship private-equity funds at a time of improved fundraising conditions compared with 2023, which was a slower period for private markets as interest rates rose.

Worthington expects the new funds to draw in about $2.1 billion worth of commitments, led by the StepStone Secondary Opportunities Fund V, as well as StepStone's Capital Partners VI fund and its Tactical Growth IV fund.

Including Thursday's move, StepStone's stock is up by 15.5% in 2024, compared with an 8.1% rise by the Nasdaq and an 8% gain by the S&P 500 SPX.

Meanwhile, Hamilton Lane Inc.'s stock (HLNE) fell 1.4% after Worthington downgraded the private-markets asset manager and data provider to neutral from buy and maintained a price target of $115 a share.

"Though we see upside still in [Hamilton Lane] shares longer term and while we remain positive on the company, the management team, and the stock over the longer term, we see tactical investment opportunities more attractive elsewhere in the near term," Worthington said.

Including Thursday's moves, Hamilton Lane's stock has risen by 16.2% in 2024.

Also read: Medical Properties Trust downgraded on execution risk and rent-collection challenges

-Steve Gelsi

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04-11-24 1141ET

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