Brookfield Asset (BAM) stock price analysis and earnings preview

Brookfield Asset Management (NYSE: BAM) stock price has pulled back after soaring to a record high in March as investors waited for the upcoming earnings. After peaking at $42.97 in March, it has retreated to $39. This performance is in line with other private equity companies like Blackrock, Apollo Global, and CVC.

Brookfield Asset Management will publish its financial results on Wednesday next week, joining hundreds of its other S&P 500 constituent companies. 

These will be important results since Brookfield is one of the biggest alternative investment companies globally with over $916 billion in assets. It has a big stake in all key areas of the industry, including infrastructure, energy, private credit, private equity and real estate.

The results come at an important time for the alternative investments industry, with most stocks sitting at their record highs. Most of these firms are also seeing robust inflows, which has pushed dry powder to a record high. 

Blackstone’s total assets under management (AUM) jumped to $1.06 trillion in Q1 while Apollo Global added over $40 billion in assets, helped by its private credit business. Blue Owl, one of the fastest-growing companies in the sector, grew its assets to over $174 billion.

Analysts believe that the alternatives segment will do well in the next few years. Total assets in the sector are expected to jump from $16.3 trillion in 2023 to $24.5 trillion by 2028. Brookfield will benefit from all this since it is one of the most respected companies in the industry.

The main driver for Brookfield’s stock after earnings will be the growth of its assets. AUM is an important metric for PE companies because that is how they make their money. 

The stock will also react to its revenue and profitability growth. Analysts expect the company’s revenue will be about $1.12 billion, a small increase from the $1.08 billion it made a year earlier. 

In terms of guidance, analysts expect the company to point to $1.19 billion in Q2 revenues and $4.9 billion for the full year. Brookfield has been growing its business gradually as revenue rose from $1.6 billion in 2019 to $3.1 billion in 2023.

The other potential catalyst for Brookfield and other private equity companies is that the IPO market is doing modestly well. Puig listed in Spain on Friday while CVC held its IPO in Amsterdam two weeks ago. This is a sign that PE firms like Brookfield may start taking their portfolio companies public.

BAM chart by TradingView

BAM has strong fundamentals but technicals are not doing well. On the daily chart, we see that the stock formed a double-top pattern at $42.97 a while ago. It has now crashed below the neckline of this pattern at $40.18, as I predicted in my last report.

Also, the 50-day and 25-day Exponential Moving Averages (EMA) have formed a bearish crossover. The Percentage Price Oscillator (PPO) has formed a bearish divergence pattern while the stock has dropped below the 23.6% Fibonacci Retracement point.

The stock has also formed a bearish flag pattern. Therefore, there is a likelihood that the stock will trade lower after earnings. If this happens, it will drop to the key support at $37.24, its 38.2% retracement point.

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