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StepStone Seen Delivering Around 25% Annual Earnings Growth, RBC Says

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StepStone (STEP) is poised for a significant increase in earnings power, with adjusted EPS expected to grow about 25% annually, driven by accretive buy-ins, fundraising and fee-related earnings margin expansion, RBC said in a note Wednesday.

According to the note, StepStone's private wealth platform has grown net asset value about five-fold to more than $20 billion in two years, with quarterly flows above $2 billion, while strong platform performance and new distribution initiatives support further growth.

RBC expects a commingled-fund fundraising cycle to drive a favorable mix shift, with fee-related earnings revenue forecast to grow 24% annually over two years and the FRE margin reaching 40% by fiscal 2028.

The analysts identified StepStone's planned private wealth buy-in as a key earnings catalyst, estimating it could lift ANI per share by about 15% and materially reduce noncontrolling interests, supporting 2028 earnings growth, the note said.

RBC initiated coverage with an outperform rating on the stock and a price target of $65.

Price: $49.90, Change: $-0.04, Percent Change: -0.08%

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Cooper Companies Fiscal Q3 Adjusted Earnings, Revenue Rise; Q4 Guidance Set

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Sector Update: Financial Stocks Decline Late Afternoon

Financial stocks were lower in late Wednesday afternoon trading, with the NYSE Financial Index shedding 0.5% and the State Street Financial Select Sector SPDR ETF (XLF) easing 0.4%.The Philadelphia Housing Index was falling 1.2%, and the State Street Real Estate Select Sector SPDR ETF (XLRE) declined 1%.Bitcoin (BTC-USD) was increasing 0.2% to $78,193, and the yield for 10-year US Treasuries rose 3.3 basis points to 4.84%.In economic news, the US Treasury Department plans to buy back up to $6 billion of government debt, CNBC reported. The move triples the normal buyback operation, following an announcement Aug. 19 from Treasury Secretary Scott Bessent that the department would at least double the normal amount for already-issued securities.Redbook US same-store sales rose by 8.3% from a year earlier in the week ended Sept. 5 after a 9.6% year-over-year increase in the previous week. Redbook noted positive customer responses to Labor Day promotions. Sales were driven mainly by back-to-school demand and seasonal apparel. Discount stores saw strong food sales ahead of the long holiday weekend.In corporate news, Patria Investments (PAX) shares fell 3% after BofA Securities downgraded the stock to underperform from neutral.UnitedHealth (UNH) sold an interest in some of its Optum Health operations in Florida to TPG (TPG), Bloomberg reported. TPG shares were shedding 3.9%.Blackstone (BX) is seeking to sell medical-grade skincare company ZO Skin Health with a valuation of around $2 billion, Reuters reported. Blackstone shares were falling 3.4%.Barclays (BCS) is leading a group of lenders preparing a 2.4 billion-euro ($2.8 billion) financing package to support Lone Star Funds' acquisition of industrial-products manufacturer ContiTech, Bloomberg reported. Barclays shares were down 1.3%.

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