Goldman Sachs reiterates Blue Owl Capital stock rating at neutral By Investing.com

Goldman Sachs reiterated a Neutral rating on Blue Owl Capital with a $9.50 target, below the current $9.75 share price, citing caution on Credit business growth, which makes up 57% of revenue. The firm expects flat to low-single-digit growth through 2027 in Credit and less than 10% average revenue/DEPS growth in 2026-2027 before improving in 2028. Blue Owl also reported Q1 2026 EPS of $0.19 versus $0.18 consensus and revenue of $753.81 million versus $689.69 million, but the note implies near-term headwinds despite a 9.2% dividend yield.

Analysis

OWL is increasingly a barbell story: fundraising strength in hard-asset/private wealth channels can cushion the P&L, but the market is still pricing it like a cleaner secular growth compounder than the underlying revenue mix justifies. The key second-order issue is that the Credit franchise is tied to the public/private BDC ecosystem, so any slowdown there is not just a top-line problem; it also pressures fee-related earnings durability and reduces the probability of multiple expansion until the market sees clearer stabilization in asset gathering.

The near-term setup is more about sentiment than fundamentals. A 9% dividend yield can support the stock, but it also raises the risk that investors treat the payout as a substitute for growth, which often caps rerating when distribution growth decelerates. If earnings revisions continue lower over the next 1-2 quarters, the stock can drift even if reported quarter-to-quarter results look acceptable, because the market will anchor to forward distributable earnings rather than current beats.

Goldman’s framing implies the inflection is later rather than sooner, which matters for positioning: the gap between 2026-27 stagnation and 2028 recovery is long enough for multiple compression to dominate. The contrarian view is that the market may be over-penalizing a business with visible capital-return support and improving non-credit mix, but that only works if Real Assets and digital infrastructure can scale fast enough to offset the BDC drag. Absent that, OWL is more likely a yield-sensitive trading vehicle than a durable growth re-rate in the next 6-9 months.

Key Decisions for Investors

• Avoid initiating fresh long OWL here; downside asymmetry remains if Credit growth stays flat-to-low-single-digit and estimate cuts continue over the next 1-2 quarters.
• If already long OWL, consider a covered-call overlay into the next earnings window to monetize the dividend yield while capping upside in a likely range-bound tape over the next 60-90 days.
• Pair trade: long GS / short OWL for 3-6 months if you want relative exposure to capital-markets quality over asset-raising sensitivity; OWL should underperform if the BDC complex stays weak.
• For more aggressive expression, buy OWL downside puts or put spreads 3-6 months out, targeting a retracement toward the prior low if revisions keep rolling over; risk/reward improves if the stock fails to reclaim the $10 area quickly.
• Only get constructive on OWL on a pullback plus evidence that non-Credit fundraising can offset Credit weakness for at least two consecutive quarters; that would be the first credible catalyst for a rerating.