UBS downgrades Carlyle Group stock rating on growth concerns

UBS has lowered its rating on The Carlyle Group's stock, now marking it as Neutral, and slashed its price target to $47.00 from $60.00. Analyst Michael Brown cited a decline in confidence in Carlyle's growth trajectory and its ability to hit its 2028 targets. The stock is presently trading at $42.31, falling 26.9% this year. Carlyle's 2028 framework projects a minimum of $2.8 billion in management fees, $3.7 billion in fee-related revenues, $1.9 billion in fee-related earnings, and $6 or more in distributable earnings per share, with a 15% or higher compound annual growth rate in fee-related earnings.

UBS's estimates fall short of these projections, with a compound annual growth rate of only 10.7% for fee-related earnings. For 2027 and 2028, UBS has revised its forward estimates for distributable earnings downwards by 5% and 2% to $4.68 and $5.65, respectively. Fee-related earnings have also been cut by 7% and 5%. The firm now estimates Carlyle as overvalued relative to its Fair Value, with a P/E ratio of 43.48.

Other analysts have reduced their earnings forecasts downwards for Carlyle, and the stock has declined 15% over the past six months. Carlyle's valuation has historically been 50% below the peer group but is now closer to a 40-45% discount. Despite a strong third-quarter 2026 performance, outperforming Wall Street expectations, the stock remains under pressure due to a moderate growth outlook for 2026 and uncertainties surrounding fee conversion timing.

Carlyle's fee-related earnings and fundraising activity remain robust. The report was AI-generated and edited.