Citi downgrades Bill Ackman’s Pershing Square to sell on valuation concerns

Citi has downgraded Pershing Square Inc, the investment firm led by billionaire investor Bill Ackman, to a sell rating citing valuation concerns. The downgrade, which keeps the stock at a $45 price target, reflects the belief that the company's stock rally has outpaced its earnings outlook, leaving limited near-term upside. Despite acknowledging Pershing Square's attractive business model, including permanent capital, high recurring fee rates, and strong incremental margins, Citi believes that these advantages are already reflected in the stock's valuation.

The bank values Pershing Square's existing funds at about $41 per share, with an additional $9 per share in potential value from future fund launches. However, stronger investment performance or better-than-expected fundraising would be needed to justify further upside in the near term. Citi also lowered its 2027 earnings-per-share estimate to $0.89 from $1.01, while raising its 2028 forecast to $0.96 from $0.91, reflecting changes to the timing of performance-fee recapture.

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