CG Options: Bearish Setup or Oversold Bounce?

Carlyle is a global investment firm operating across three business segments: 'Global Private Equity', 'Global Credit', and 'Global Investment Solutions'. 'Global Private Equity' advises funds investing in buyouts, growth, real estate, infrastructure, and natural resources. 'Global Credit' advises products across the credit spectrum, including liquid credit, private credit, insurance solutions, and global capital markets. 'Global Investment Solutions', operating through 'AlpInvest', provides private equity portfolio construction via fund of funds, secondary purchases, and co-investment programs. Carlyle targets a diverse investor base, including pension funds, sovereign wealth funds, and high-net-worth individuals. The company differentiates itself by leveraging deep industry expertise, a global network of investment professionals, and a consistent, disciplined investment process to deliver attractive returns.

The short-term outlook for CG (The Carlyle Group Inc.) is bearish. All the recent analyst ratings involve price target *decreases*. While some analysts maintain a 'Buy' rating (Citigroup, TD Cowen), the lowered price targets suggest a tempered outlook. Keefe, Bruyette & Woods maintains a 'Market Perform' rating with a reduced target, while JP Morgan maintains 'Neutral' also with a lowered target. Evercore ISI Group maintains 'In-Line' with a reduced target. The consensus appears to be that while Carlyle Group may still be a reasonable investment (or perform in line with the market), its upside potential is less than previously anticipated. The persistent lowering of price targets across multiple firms suggests a negative sentiment shift, likely driven by underlying concerns about the company's performance or broader market conditions affecting the asset management industry. This could translate to downward pressure on CG's stock price in the next 1-2 weeks, making bearish options strategies potentially attractive.

CG's technical outlook is decidedly bearish. The recent price action shows a clear downtrend, with the price falling from approximately $69.35 in mid-September to $51.13 as of November 4th. The stock is trading below its 21-day EMA ($57.96) and 50-day SMA ($62.04), confirming the downtrend. The MACD reinforces this bearish sentiment, with the MACD line (-2.06) significantly below the signal line (-1.66), indicating strong downward momentum. The RSI of 25.97 suggests the stock is heavily oversold, but in a strong downtrend, oversold conditions can persist. The Stochastic Oscillator (STOCHk at 14.63) is also very low, but this is overshadowed by the strong downward momentum. Bollinger Bands indicate the price is testing the lower band, suggesting potential further downside. The ATR has remained relatively steady, suggesting consistent volatility. Overall, the confluence of negative signals from price action, moving averages, momentum indicators, and volatility suggests a high probability of continued bearish movement over the next 1-3 months. The absence of a 200-day SMA further limits insight into longer-term trends, but the prevailing short-term signals are overwhelmingly negative.

Carlyle's MD&A paints a moderately bullish picture, driven by strong growth in fee-earning AUM and improved performance in certain segments. Fund management fees increased $86.0 million, or 16%, for the three months ended June 30, 2025, and $148.5 million, or 14%, for the six months ended June 30, 2025. This increase was 'primarily due to the commencement of the investment period for certain newly raised funds which charge fees based on commitments'. Total AUM increased to $464.6 billion. Performance allocations also saw a significant increase, rising $407.7 million for the three months and $651.4 million for the six months ended June 30, 2025. Realized proceeds in carry funds totaled $33.0 billion over the last twelve months. Inflows were strong, with $13.4 billion in the second quarter and $50.6 billion over the last twelve months. However, there are also concerns. The MD&A notes that 'the impact of pervasive uncertainty in global markets, combined with heightened equity and credit market volatility, may impact our investment deployment and realization pace in the near term'. Additionally, principal investment income saw a decrease, and compensation and benefits expenses increased significantly due to higher performance-related compensation. Overall, the company shows strong growth and profitability, but macroeconomic uncertainties and rising expenses warrant careful monitoring.

Carlyle Group's Q2 2025 earnings call projects a moderately bullish outlook, driven by strong performance metrics and increased guidance. CEO Harvey Schwartz highlighted 'an exceptionally strong second quarter' with record highs in FRE at $323 million, up 18% year-over-year, and record AUM of $465 billion. CFO John Redett revised the full year FRE growth outlook to approximately 10%, up from the prior 6%, citing 'strong momentum...across the entire platform.' The company also anticipates full year inflows of $50 billion, compared to the previous $40 billion outlook. The Global Credit and Carlyle AlpInvest segments delivered record FRE, contributing significantly to the firm's diversified earnings stream. Management emphasized the increasing demand for private capital and the firm's disciplined approach to risk pricing. They also highlighted the return of almost $15 billion to investors over the last 12 months, a figure nearly triple the industry average, which 'differentiates us in the marketplace compared to other firms.'

CG's financial performance presents a somewhat positive, yet mixed picture. Revenue has fluctuated, starting at $754.2M in Q1 2024, peaking at $1.62B in Q2 2025, indicating some growth. The gross profit ratio has also varied, with a high of 0.87 in Q3 2024 and a low of 0.61 in the most recent quarter, suggesting volatility in profitability. Operating cash flow has been inconsistent; while Q3 2024 showed a strong positive cash flow of $791.9M, Q2 2025 data is not available. Total debt has increased from $9.297B in Q1 2024 to $10.705B in Q2 2025. The inconsistent profitability and cash flow, coupled with increasing debt, suggest the company may face challenges in maintaining its financial health. However, the revenue growth could signal positive momentum if profitability can be stabilized.

The company demonstrates a moderately bullish profile, characterized by solid revenue growth and improving profitability. Revenue has consistently increased, indicating strong market demand. The gross margin exhibits stability, suggesting efficient cost management. Return on Equity (ROE) has shown positive movement, signaling enhanced profitability and efficient use of shareholder equity. The Price-to-Earnings (P/E) ratio, while elevated, might be justifiable given the growth trajectory and positive ROE trend. The Debt-to-Equity ratio shows a slight increase, which warrants monitoring, but is counterbalanced by a healthy Current Ratio, implying sufficient liquidity to meet short-term obligations. Overall, the company presents a favorable picture with growth and profitability, though the leverage should be watched closely. The combination of growth and profitability suggests potential for continued positive performance over the next 12 months.