Investing.com -- J.P. Morgan has upgraded CVC (ASX: CVC ) to “overweight” from “neutral,” citing improving exit activity, a more favorable earnings outlook, and a valuation discount versus peers, in a note dated Friday.

The brokerage raised its December 2026 price target to €20.60 from €16.90, implying 16% upside from the July 3 close of €17.63.

CVC trades at about 20x 2026E P/E and around 21x P/FRE, materially below EQT (ST: EQTAB ) and Partners Group.

Even after applying a lower multiple to account for lower liquidity and more volatile fee-related earnings, J.P. Morgan sees significant upside.

The analysts use more conservative assumptions than consensus but finds valuation support in upcoming catalysts.

Revised estimates include a 28% increase in 2026 carried interest and investment income to €403 million, reflecting improved contribution from Europe/Americas VII and other funds such as Asia V and StratOps II.

However, 2025 estimates were lowered by 4% to €274 million due to limited carry from announced exits this year, many of which come from funds not yet generating performance fees.

Earnings forecasts were updated accordingly. 2025 EPS was trimmed by 3% to €0.80, while 2026 EPS was raised 7% to €0.90 and 2027 EPS edged up 1% to €1.10.

Free-related earnings per share (FRE/share) were revised downward by 3-5% over 2025–2027 due to higher expected operating expenses.

CVC’s forecasted EPS compound annual growth rate for 2024–2028 is 15%, and its FRE CAGR over the same period is 6%.

CVC announced 10 exits in the first half of 2025, up from 3 in the prior-year period. This compares to 17 exits from EQT, 4 from Partners Group, and 2 from Bridgepoint. J.P. Morgan attributes the uptick in exits to more favorable deal-making conditions despite ongoing macro risks.

Fundraising remains backloaded, with major flagships not expected before 2028, but infrastructure strategies such as DIF VIII and CIF IV could add to fee-paying assets under management from 2026. J.P. Morgan forecasts 7% average annual FPAuM growth for CVC between 2024 and 2028.

Compared to peers, CVC’s valuation remains undemanding. Its 2026E P/E of 19.9x and 2026E P/FRE of 25.2x trail EQT’s 26.3x and 35.7x, respectively. Dividend yield forecasts for CVC stand at 4.4% in 2026, higher than EQT’s 1.6% but below Partners’ 4.5%.