Partners Group: Record Profit and 10% Dividend Hike Can't Quell Sell-Side Skepticism

Partners Group's 19% profit surge contrasts with 12% stock decline amid analyst downgrades and short seller allegations of asset misvaluation; dividend hike signals stability.

Partners Group delivered a standout operational performance last year, yet its stock continues to trade under a cloud. The Zug-based private markets specialist saw net profit jump 12% to 1.26 billion Swiss francs, while operating profit surged 19%, powered by strong performance fees that now account for close to a third of total revenue. But the share price tells a different story: since the start of the year, it has fallen 11.81%, closing at €963.00 on Friday. That leaves the stock trading 9.87% below its 200-day moving average and 23.75% lower than 12 months ago.

The disconnect between corporate results and market reception is being driven by a combination of analyst downgrades and a damaging short seller attack. On April 13, Citigroup cut its rating on the stock from Buy to Sell, and the consensus among 14 analysts now stands at Sell. Several other houses have trimmed their price targets in recent weeks. The average target has dropped to around 1,267 Swiss francs, a decline of roughly 7% from earlier levels. Simply Wall St, for instance, lowered its fair value estimate from 1,443.58 francs to 1,400.00 francs on May 9 — a moderate cut but one that underscores the view that the stock’s valuation premium leaves little room for error.

Adding to the pressure, short seller Grizzly Research announced it is betting against Partners Group, alleging that up to 40% of assets in the firm’s evergreen funds may be materially misvalued. The accusation prompted a sharp rebuttal from the company, which called the report defamatory and misleading and is considering legal action for market manipulation. Partners Group specifically addressed a key claim regarding its stake in Stada: it stated that the Russian subsidiary of the pharmaceutical company had already been written down to zero, and that the majority of the holding was sold in the first quarter at a price above its most recently recorded valuation.

Despite the noise, management is maintaining an upbeat outlook. The board has proposed a dividend of 46.00 francs per share for the past financial year — a 10% increase that will be put to a vote at the annual general meeting in May. Analysts view this as a signal of financial stability amid the turbulence. Looking ahead, the company expects new client inflows of between $26 billion and $32 billion this year. Long-term growth projections from analysts see earnings and revenue expanding at around 9.8% and 10.2% per annum respectively, and management holds to its ambition of growing assets under management to $450 billion.

Yet the market remains unconvinced. The reason, according to several observers, lies in valuation. Partners Group’s shares have historically commanded a premium, but that premium is now being questioned in the face of a challenging transaction environment and uncertain performance fee growth. Until clearer evidence of sustained fee expansion and more compelling capital allocation emerges, the stock’s premium is likely to remain the central flashpoint — even as the company delivers record profits and a bigger dividend.