Is STEP a Buy or a Sell? The Bull and Bear Case (2026)

That depends on which case you find more convincing, and both are on this page. The bull case rests on Fee-earning AUM plus a large undeployed backlog, with revenue (ttm) at ~$2.01B, up ~4% year over year in the June 2026 quarter. The bear case rests on carried interest is genuinely volatile: total performance fees swung to about $1.07 billion in fiscal 2026 from $407.8 million a year earlier, and fiscal Q4 performance fee earnings fell 57% year over year, so quarter-to-quarter GAAP results say little about run-rate economics. Analysts covering it are spread from $48.00 to $87.00, which is itself a signal that this is genuinely contested. If you believe the thesis, the real questions become sizing and overlap rather than timing. Walnut is not an investment adviser and this is not a recommendation.

Nobody can answer that for you, and the honest version of the question is narrower: has anything changed in the reason you bought it? The bear case on this page is the place to check. Carried interest is genuinely volatile: total performance fees swung to about $1.07 billion in fiscal 2026 from $407.8 million a year earlier, and fiscal Q4 performance fee earnings fell 57% year over year, so quarter-to-quarter GAAP results say little about run-rate economics. If that risk is what you were worried about and it is now playing out, that is a real signal. If the price simply fell while the thesis held, that is a different situation entirely. The most pessimistic published target is $48.00, +6.5% from the $45.05 price, which is one analyst's downside case rather than a floor. Walnut is not an investment adviser.

Fee-earning AUM plus a large undeployed backlog. Fee-earning AUM reached about $144.0 billion at the end of fiscal 2026, up roughly 19% year over year, and undeployed fee-earning capital stood at about $40.1 billion, up roughly 63%. The most optimistic analyst target on STEP is $87.00, +93.1% from the $45.05 price. That figure is only reachable if this thesis works close to its best case.

Carried interest is genuinely volatile: total performance fees swung to about $1.07 billion in fiscal 2026 from $407.8 million a year earlier, and fiscal Q4 performance fee earnings fell 57% year over year, so quarter-to-quarter GAAP results say little about run-rate economics. The reported fiscal 2026 net loss of roughly $535.8 million, driven by about $1.74 billion of largely non-cash equity-based compensation from the subsidiary buy-in and by unrealized carry accruals, makes the income statement hard to read and is part of why the stock derated. A slower exit environment for private assets delays realizations, which suppresses both carried interest and the distributions that fund new client commitments. Roughly 11% of AUM sits in software, and 2026 anxiety about AI disrupting software business models hit private-capital stocks broadly, showing how sentiment on the underlying asset classes transmits straight to the manager's multiple. The evergreen wealth funds also carry redemption and distribution risk: they offer periodic liquidity on illiquid assets, and a stretch of weak returns or advisor sentiment could turn net inflows into net outflows. Interest rates are a newer pressure point: when September 2026 inflation came in above forecasts and traders raised the odds of a Fed hike, STEP fell with other asset managers on worries that higher rates slow dealmaking and exits. The dividend also needs watching, since trailing payouts of ~$1.72 per share exceed adjusted earnings expectations for fiscal 2027 of ~$2.46 by a thin margin once the variable component is included, and the supplemental piece depends on realized carry. The most pessimistic published target is $48.00, +6.5% from the current price, which is roughly what the stock is worth if these risks bite rather than the drivers.

StepStone Group is a private markets investment firm that is an outsourced allocator, building and managing private equity, credit, infrastructure and real estate programs for institutions and wealth channels.

Decide that in advance, because it is far harder to think clearly once a position is moving against you. The concrete tripwires here: the driver behind the bull case (Fee-earning AUM plus a large undeployed backlog) stalling in the reported numbers rather than in the narrative, the risk above (carried interest is genuinely volatile: total performance fees swung to about $1.07 billion in fiscal 2026 from $407.8 million a year earlier, and fiscal Q4 performance fee earnings fell 57% year over year, so quarter-to-quarter GAAP results say little about run-rate economics) turning from a possibility into a reported fact, or the position growing large enough that a bad outcome would matter to your whole portfolio regardless of who is right.

StepStone is a private markets allocator. Institutions and wealthy individuals give it capital, and it builds customized portfolios of private equity, infrastructure, private debt and real estate using fund commitments, secondaries and co-investments. It earns management and advisory fees on that capital plus carried interest when investments are realized.

As of March 31, 2026, StepStone was responsible for approximately $885 billion of total capital, including about $233.3 billion of discretionary assets under management and roughly $144.0 billion of fee-earning AUM. Its market capitalization was around ~$5.4 billion in mid-October 2026, far smaller than its AUM because it manages other people's money.

The roughly $535.8 million GAAP net loss attributable to StepStone was driven mainly by about $1.74 billion of largely non-cash equity-based compensation tied to the buy-in of interests in its asset-class subsidiaries, plus accounting swings in unrealized carried interest and the related compensation accruals. Cash fee-related earnings grew about 14% over the same period.