On Tuesday, Citi updated its stance on BlackRock Inc. (NYSE:BLK) shares, increasing the firm's price target to $930 from the previous $920. The investment bank continues to endorse a Buy rating for the asset management giant.
The decision follows BlackRock's recent performance, which, despite being mixed for the quarter, displayed several encouraging signs, including positive fixed income, currency, and commodities (FICC) flows, non-operating income, and operating margin.
BlackRock's organic base fee rate showed improvement, growing 3% in the second quarter compared to 2% in the first quarter. Management of the company expressed confidence in achieving a 5% target in the second half of 2024, citing opportunities in private markets, exchange-traded funds (ETFs), managed portfolios, and technology as key growth drivers.
The company has also experienced favorable underlying flow trends and has secured recent mandate wins. Additionally, a re-risking environment and seasonal factors are expected to contribute to an improved flow outlook moving forward. Despite a slight reduction in estimates due to private equity assets under management levels, Citi's revised price target suggests confidence in BlackRock's strategic position.
Citi highlights BlackRock's advantageous leverage to several structural trends, including ETFs, private markets, technology, and managed models. The new price target implies a 22x multiple on Citi's 2024 earnings estimates and a 20x multiple on the 2025 estimates for BlackRock. The firm's analysis points to a robust future for BlackRock amidst the evolving investment landscape.
In other recent news, BlackRock has been the focus of several noteworthy developments. Evercore ISI raised its share target for BlackRock, citing confidence in the company's growth prospects. This comes after BlackRock expressed optimism in its ability to enhance long-term flows and base fee growth. The firm's earnings estimates for 2024 and 2025 were also revised, reflecting stronger market conditions at the start of Q3 2024.
BlackRock reported a record high of $10.65 trillion in assets under management (AUM) for Q2, driven by increased investor interest in exchange-traded funds (ETFs). The company saw total net inflows of $81.57 billion during the quarter, with ETFs accounting for $83 billion of this amount. BlackRock's total revenue rose 8% to $4.81 billion and net income for the quarter ended June 30 was reported at $1.50 billion.
BlackRock also disclosed its financial performance for the first half of 2024, including the second quarter ending June 30. The company's broad range of investment management services and its diverse offerings across various clients, asset classes, products, and geographies were highlighted.
Notably, BlackRock has secured significant mandates, including a $10 billion fixed income pension mandate and its first substantial general account allocation for private structured credit.
Lastly, BlackRock's acquisition of data provider Preqin for nearly $3.2 billion was reaffirmed. Despite the acquisition being anticipated to have a slight dilutive effect on BlackRock's earnings per share in 2025, UBS maintained a neutral stance on BlackRock post-acquisition. The acquisition is seen as a strategic move to deepen BlackRock's presence in the private markets and enhance its capabilities in alternative investments.
InvestingPro Insights
As BlackRock Inc. (NYSE:BLK) continues to navigate the evolving financial landscape, real-time data from InvestingPro offers further insights into the company's performance. With a market capitalization of $121.96 billion, BlackRock trades at a P/E ratio of 20.55, showcasing its market valuation relative to earnings. Notably, analysts have revised their earnings expectations downwards for the upcoming period, which could be a factor to consider for potential investors.
InvestingPro Tips highlight BlackRock's consistent commitment to shareholder returns, with the company having raised its dividend for 14 consecutive years and maintained dividend payments for 22 consecutive years. Additionally, the company is trading near its 52-week high, reflecting investor confidence. For those interested in further analysis, there are more InvestingPro Tips available, offering deeper insights into the company's financial health and strategic positioning. To explore these additional tips, visit https://www.investing.com/pro/BLK and consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
InvestingPro data also indicates a robust revenue growth of 7.68% over the last twelve months as of Q2 2024, coupled with a gross profit margin of 49.32%, which may interest investors looking at the company's efficiency and profitability. These metrics, alongside BlackRock's strategic initiatives and Citi's optimistic outlook, paint a comprehensive picture for those evaluating the asset manager's stock.
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