Edgen Stock·Sep 20 2025, 10:33
StepStone Group Shares Advance Following Analyst Upgrade
StepStone Group Inc. (STEP) shares recorded an 8.8% advance in the last trading session on September 19, 2025, closing at $65.39. This upward movement was accompanied by notable trading volume and was primarily attributed to a significant upgrade from Goldman Sachs.
The Event in Detail
Goldman Sachs initiated an upgrade of StepStone Group stock, moving its rating from 'Neutral' to 'Buy', and concurrently raised its price target from $64 to $83.00. This revised target suggests a potential upside of 37% from the stock's trading price of $60.13 prior to the upgrade. The investment bank cited StepStone's expanding private wealth business and a robust institutional pipeline as key catalysts for future growth.
Analysts at Goldman Sachs project a substantial 24% compound annual growth rate (CAGR) for StepStone's fee-related earnings through 2028, alongside a 22% overall earnings per share (EPS) CAGR for the same period. For its upcoming quarterly report, StepStone Group is expected to report earnings of $0.45 per share, which would represent no change from the prior-year quarter. Revenues are anticipated to reach $235.99 million, an increase of 13% year-over-year. As of July 31, 2025, StepStone Private Wealth Solutions achieved a significant milestone, reaching $10.2 billion in assets under management (AUM). The company also announced an increase in its quarterly dividend from $0.24 to $0.28 per share.
Analysis of Market Reaction
The rally in StepStone Group shares reflects immediate investor confidence following the prominent endorsement from Goldman Sachs. The upgrade highlights StepStone's strategic positioning within the alternative asset management sector, particularly its strong presence in the private wealth business and its ability to maintain consistent fundraising momentum. However, a critical point for investor consideration is the consensus EPS estimate for the upcoming quarter, which has remained unchanged over the last 30 days. Empirical research indicates a strong correlation between trends in earnings estimate revisions and near-term stock price movements, suggesting that the absence of upward revisions could temper sustained investor enthusiasm despite the positive analyst rating.
Broader Context and Implications
StepStone Group currently holds a market capitalization of approximately $7.74 billion. The stock's Price-to-Book (P/B) ratio stands at 5.43, and it offers a forward dividend yield of 2.32% with an annualized payout of $1.52. While the company's focus on alternative investments and strong growth projections from Goldman Sachs position it as a long-term value creator, the Zacks Rank #3 (Hold) rating suggests a neutral near-term outlook. This contrasts with companies exhibiting positive earnings estimate revisions; for instance, SoFi Technologies, Inc. (SOFI), also in the Financial - Miscellaneous Services industry, recently saw its shares advance 3.6%, supported by a +2.7% change in its consensus EPS estimate over the past month.
Expert Commentary
Goldman Sachs analysts emphasized their view that StepStone's growth attributes are not fully reflected in its current valuation. They noted that at 24 times 2026 price-to-earnings (net of stock-based compensation) and a 1.1 times price/earnings-to-growth ratio, the market may be undervaluing the company's potential. Specifically, Goldman Sachs projects StepStone's Private Wealth AUM to reach approximately $33 billion by 2028, driving a 67% management fee CAGR from 2025 to 2028.
"Goldman Sachs upgraded StepStone Group (NASDAQ:STEP) from Neutral to Buy and set a price target of $83.00, representing 37% potential upside... The upgrade is driven by Goldman's view that StepStone is among the fastest-growing alternative asset managers, with a projected 24% normalized fee-related earnings compound annual growth rate from 2024 to 2028, and a 22% overall earnings per share CAGR during the same period."
Looking Ahead
Investors will continue to closely monitor future earnings estimate revisions for StepStone Group and the company's operational performance within its rapidly expanding private wealth and institutional businesses. The upcoming quarterly earnings report will be crucial in providing further clarity on whether the growth catalysts identified by Goldman Sachs translate into stronger financial results and subsequent positive analyst revisions, which are typically key for sustained upward momentum in stock price.
