On Tuesday, Evercore ISI adjusted its outlook on BlackRock Inc. (NYSE: NYSE:BLK) shares, increasing the firm's price target to $920 from the previous $910, while maintaining an Outperform rating on the stock.
The adjustment follows BlackRock's expression of confidence in its ability to improve long-term flows and organic base fee growth. The company cited several reasons for this optimism, including a historically strong second half of the year for ETFs, which have already shown a positive start in July. Additionally, BlackRock anticipates an uptick in private market flows following high realizations in the second quarter.
BlackRock has also secured some significant mandates, including a $10 billion fixed income pension mandate, along with liability-driven investment (LDI) and quantitative mandates, and its first substantial general account allocation for private structured credit. These developments, coupled with an increased adoption of ETFs for fixed income, are expected to contribute to the company's growth.
The company is also poised to benefit from a 2% tailwind from higher markets going into the third quarter, and its continued strong performance in alpha generation. Despite high expectations, with consensus forecasts predicting approximately $130 billion of inflows in each quarter of the second half of 2024, BlackRock is positioned to meet these targets due to its diverse offerings across various clients, asset classes, products, and geographies. This is especially true as the company has increased investments in private markets.
Evercore ISI also revised its earnings estimates for BlackRock for the years 2024 and 2025, raising them to $41.42 and $47.06 per share, up from $40.61 and $46.73, respectively. The revision is based on stronger market conditions at the start of the third quarter of 2024.
The firm's updated price target of $920 represents a $10 increase from the previous target, reflecting the positive outlook on BlackRock's continued growth and client-focused diversification.
InvestingPro Insights
BlackRock Inc. (NYSE: BLK) has demonstrated a robust financial performance, with a market capitalization of $121.96 billion, showcasing its significant presence in the investment management industry. The company's commitment to shareholder returns is evident from its consistent dividend growth, having raised its dividend for 14 consecutive years and maintained dividend payments for 22 consecutive years. These InvestingPro Tips highlight BlackRock's stability and appeal to income-focused investors.
With a P/E ratio of 20.55 and a slightly higher forward P/E ratio of 22.02, BlackRock trades at a premium, reflecting its strong market position and investor confidence in its earnings potential. However, it's worth noting that some analysts have revised their earnings downwards for the upcoming period, suggesting a cautious approach may be warranted. The company's revenue growth of 7.68% over the last twelve months as of Q2 2024 underscores its ability to expand despite market fluctuations. Moreover, with analysts predicting profitability this year and a track record of profitability over the last twelve months, BlackRock appears to be on a solid footing.
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