Apollo Global Management's (APO) current valuation and consensus reflect its accelerating fee-related earnings and spread-related earnings growth, RBC Capital Markets said.

Apollo is tracking ahead of its 2024 investor day targets for assets under management, fee-related revenue, capital, and FRE while slightly lagging on SRE. Its adjusted net income is in line with expectations. RBC said in a Monday note that investors could likely earn a 16% internal rate of return, including dividends, if these targets are achieved by 2029.

The investment firm expects Athene to deliver 11% earnings growth, in line with management's target. The firm said 10% SRE growth through the cycle is achievable despite higher competition and lower rates. Near-term growth is supported as headwinds like asset prepayments, normalization of profitable business and reduced interest rate sensitivity ease.

RBC said 10% near-term growth is achievable as headwinds like asset prepayments, normalization of profitable business and reduced interest rate sensitivity ease.

The brokerage projects FRE growing at nearly 20% through 2027. Growth is expected to be driven by Fund XI fundraising with a $25 billion target, Apollo Capital Solutions revenue reaching $1.1 billion and FRE margin expansion.

RBC initiated coverage on Apollo Global with a sector perform rating, with a $142 price target.

Price: 114.01, Change: +0.27, Percent Change: +0.24