UBS recently released a research report on the US brokerage and asset management industry, indicating a "moderately optimistic" outlook. Investor sentiment has become more rational compared to last year, with expectations of steady market growth in 2026. The report covers several prominent institutions and assigns "Buy" ratings to select companies, including TPG (TPG.US), Apollo Global Management LLC (APO.US), and Charles Schwab (SCHW.US).
UBS highlighted that the "Buy"-rated firms generally exhibit strong growth visibility, reasonable valuations, or clear catalysts. Apollo Global Management LLC, described as a "growth and value hybrid," benefits from its insurance platform Athene’s diversified strategy and robust demand for annuities. The firm’s recurring fee-related earnings (FRE) are projected to achieve a 20% compound annual growth rate by 2029, with current valuations remaining attractive.
TPG, meanwhile, is expected to deliver over 20% FRE growth driven by credit business expansion, wealth management channel development, and potential insurance partnerships. UBS forecasts TPG’s FRE margin to reach 50% by 2029, significantly exceeding its 45%+ target.
Charles Schwab is widely favored by the market, but its stock price has yet to fully reflect its growth potential. UBS estimates that a 5% annualized growth in legacy Ameritrade client assets could contribute approximately 1 percentage point to the company’s overall net new assets (NNA), supporting long-term growth. In an optimistic scenario, earnings per share could reach $8.38 by 2028, representing a 14% upside from current expectations.
Despite market concerns over risks related to First Brands, UBS maintains a "Buy" rating for Jefferies (JEF.US). The bank estimates that current market pricing already factors in a $150–250 million net earnings loss, while the actual direct impact is only $40–45 million. Jefferies continues to gain market share in M&A advisory and capital markets, with a 2027 forward P/E of just 11x—below the three-year industry average—highlighting its valuation appeal.
For firms like Ares Management (ARES.US) and LPL Financial (LPLA.US), which received "Neutral" ratings, UBS outlined key reasons for caution. While Ares boasts strong fundamentals and is likely to exceed targets such as $750 billion in organic assets under management (AUM) and 16%–20% FRE growth, its 2026 forward P/E of 25.9x represents a 132% premium to peers, requiring either earnings surprises or further valuation expansion for upside.
LPL’s "Neutral" rating stems from near-term growth pressures. The company is currently focused on retaining its Commonwealth advisor team, with organic NNA recovery likely slower than market expectations. Organic growth is projected to remain below 7% in the coming quarters, while 2026 core management fees may exceed industry consensus, weighing on short-term performance.
**Industry Trends and Investment Opportunities** UBS also emphasized multiple structural opportunities for 2026. Private asset allocations in 401(k) plans are expected to gradually increase, with target-date funds (TDFs) serving as the primary channel. Private assets in TDFs could rise from negligible levels in 2024 to 5% by 2028, with firms like KKR (KKR.US), Blackstone (BX.US), and Apollo best positioned.
In the insurance market, private credit presents a $3.5–6.5 trillion opportunity. Blackstone could add $500–750 billion in AUM and $2–3 billion in revenue by capturing around 15% market share.
For M&A activity, consensus expects fee volumes to recover to 100%–105% of 2021 peaks by 2026, expanding further to 100%–115% by 2027. However, UBS holds a more conservative view, projecting 90% and 105%, respectively, suggesting current optimism is already priced in and risk-reward for boutique investment banks appears balanced.
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