Citi upgrades Carlyle Group stock to Buy on improved fundraising outlook

Citi upgraded The Carlyle Group (CG) to Buy, significantly raising its price target to $65 from $44, citing an improved fundraising outlook across multiple business segments and an anticipated tailwind from an improving capital markets backdrop, particularly for its private equity arm. The firm expects Carlyle to exceed its 2025 fundraising and fee-related earnings growth targets, noting the alternative asset manager trades at a significant 46% discount to peers despite strong recent performance, including record Q1 2025 results and $453 billion in AUM, presenting an attractive risk/reward opportunity.

Analysis

The Carlyle Group (CG) has received a significant endorsement from Citi, which upgraded the stock to Buy and raised its price target to $65 from $44. This upgrade is predicated on an improving fundraising outlook across Carlyle's credit, insurance, private wealth, and AlpInvest businesses, leading Citi to project that the firm will surpass its 2025 guidance for both fundraising (approx. $40 billion) and fee-related earnings growth (6%). This optimism is supported by Carlyle's recent performance, including record first-quarter 2025 results where fee-related earnings grew 17% year-over-year to $311 million and assets under management hit a new high of $453 billion. A key part of the bull thesis is valuation; Carlyle trades at a substantial 46% discount to its alternative asset manager peers, with forward P/E multiples of 11.6x and 10.5x on Citi's 2026 and 2027 estimates, respectively—a level deemed 'excessive' given its momentum. The improving capital markets backdrop is seen as a crucial tailwind, expected to benefit Carlyle's largest private equity segment in 2026 and 2027. This positive view is echoed by other firms like CFRA and Goldman Sachs, which also cite recovery in private equity and growth prospects in areas like credit and secondaries.

Key Decisions for Investors

• Given the strong operational momentum, multiple analyst upgrades, and a significant valuation discount of approximately 46% relative to peers, investors may view the stock as having an attractive risk/reward profile.
• A key near-term catalyst to monitor is the upcoming second-quarter earnings call, where management could potentially raise its 2025 fundraising and fee-related earnings growth guidance.
• The full realization of the projected earnings trajectory for 2026 and 2027 is dependent on a sustained recovery in capital markets, so investors should track private equity monetization rates and transactional activity as leading indicators.