BBU Stock Forecast & Price Target

Brookfield Business Partners LP has demonstrated strong financial performance, highlighted by a significant increase in EBITDA to US$652 million, representing a 13% sequential growth, which signals robust underlying business momentum. Within its operating segments, the Industrial Operations outperformed expectations with an EBITDA of US$354 million, up 12% sequentially and 15.7% year-over-year, indicating solid operational strength. Additionally, growth in the Clarios and Scientific Games segments further supports the positive outlook, showcasing favorable trends driven by high-margin products and improved operational efficiencies.

Brookfield Business Partners LP faces a negative outlook primarily due to significant declines in EBITDA from key segments, exemplified by CDK Global's ~10% quarter-over-quarter and ~36% year-over-year decrease, alongside issues stemming from a stake sale and ongoing technology investments. Additionally, a notable ~33% decrease in EBITDA for DexKo further underscores the financial struggles within the company's diverse segments, with Funds From Operations (FFO) also declining year-over-year. Overall, these operational setbacks, paired with expectations of compressed EV/EBITDA multiples across the company's segments, signal potential underperformance of investments and adverse impacts on the company's valuation.