2025 Industry Shake-Up: Goldman Highlights KKR, Raymond James, Hamilton Lane

Goldman Sachs is shaking up the 2025 playbook for the capital markets industry. In a note shared Monday, analyst Alexander Blostein, CFA outlined key winners and losers in alternative asset managers, brokers, and traditional managers, with bold rating adjustments.

Among the top picks are KKR & Co. Inc. KKR and Raymond James Financial, Inc. RJF, while Hamilton Lane Incorporated HLNE and Cboe Global Markets, Inc. CBOE face downgrades.

Alternative Managers: The 2024 High-Flyers Face Valuation Concerns

Alternative asset managers outperformed the S&P 500 by a robust 28% in 2024, surging 51% on average. Yet, lofty valuations and slowing growth expectations may challenge the sector’s momentum in 2025.

Some stocks nearly doubled: KKR & Co. Inc. climbed +82%, and StepStone Group Inc. STEP was up 79%. At the lower end, Carlyle Group Inc. CG rose 24%, while Hamilton Lane Incorporated posted a 31% gain.

Despite these massive returns, average price-to-earnings (P/E) multiples for the group expanded over 30% last year, with the 2026 expected P/E standing at a steep 24.5x.

"We think some of the multiple expansion is justified by improving organic FRE [fee-related earnings] growth and a cyclical boost from capital markets activity, but valuations are becoming increasingly prohibitive," Blostein said.

Key Themes Driving Alternative Managers In 2025

Goldman Sachs indicated three major themes shaping the landscape for alternative managers in 2025:

1. Private Credit Competition: After driving 70% of management fee growth in 2024, private credit faces rising competition and risks of commoditization in direct lending, although demand for private investment-grade credit remains solid.
2. Retail and Private Wealth Expansion: The retail investor channel will continue to grow, but with increasing competition from scaled players.
3. Private Equity Revival: Fundraising and realization activity is expected to recover as deal markets normalize, benefiting corporate private equity managers.

Among alternative managers, Goldman’s top buys are KKR & Co. Inc. and TPG Inc. TPG for their robust FRE growth potential.

On the flip side, Hamilton Lane Incorporated was cut to Sell on slowing fee growth, with a target of $139. Blue Owl Capital Inc. OWL was downgraded to Neutral on slowing organic growth.

Brokers: Recovery In M&A Boosts RJF

Improved capital markets activity in 2025 could boost deal-making, especially in M&A.

Raymond James Financial, Inc. RJF was upgraded from Neutral to Buy, with Goldman setting a $185 price target. Blostein highlighted RJF's $2.5 billion excess capital and strong operating leverage as key growth drivers.

LPL Financial Holdings Inc. LPLA remains a top pick, while trust banks like The Bank of New York Mellon Corporation BK and State Street Corporation STT are well-positioned for balanced growth.

Traditional Managers: Stabilizing Or Slowing

Traditional asset managers show mixed potential.

Franklin Resources, Inc. BEN was upgraded from Sell to Neutral due to its attractive valuation, including a 6.5% dividend yield and a 14% free cash flow yield. Janus Henderson Group plc JHG also moved to Neutral on improving performance fees and ETF growth.

On the downside, Affiliated Managers Group, Inc. AMG was downgraded to Neutral due to deteriorating EBITDA growth. Cboe Global Markets, Inc. CBOE was cut from Neutral to Sell as growth in SPX and VIX option products stagnated.

Company	Rating Change	New Price Target
Franklin Resources, Inc.	Sell → Neutral	$22.00
Janus Henderson Group plc	Sell → Neutral	$45.00
Affiliated Managers Group, Inc.	Buy → Neutral	$191.00
Cboe Global Markets, Inc.	Neutral → Sell	$184.00

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