On Friday, Citi increased its price target for The Blackstone Group (NYSE: NYSE:BX) shares to $135 from the previous $127, while keeping a Neutral rating on the stock. The adjustment follows Blackstone's release of second-quarter results for 2024, which displayed a mix of strengths and weaknesses.
The company's results showed a 1.2% increase in share price, despite fee-related earnings (FRE) falling short of Citi's expectations. This shortfall was attributed to lower-than-anticipated fee-related performance fees and base management fees. However, these were partly balanced out by lower expenses.
Citi's report highlighted several positive developments for Blackstone. A strong quarter in fundraising, increased momentum in investment deployment, continued robust performance in the credit sector, and a brighter outlook for real estate were all noted as contributing factors to the improved forecast.
In light of these factors, Citi has revised its earnings per share (EPS) estimates for Blackstone for the years 2024 and 2025. The new EPS projections are set at $4.89 and $6.23, respectively, up from the previous estimates of $4.71 and $6.00. This adjustment reflects the anticipated benefits of increased fundraising and deployment activities, as well as higher fee-related performance revenues for the fourth quarter of 2024.
The new price target of $135 is based on 28 times and 22 times Citi's EPS estimates for 2024 and 2025. Despite the optimistic outlook and the long-term potential that Citi acknowledges in Blackstone's business, the firm advises maintaining a Neutral rating. The recommendation is grounded in a cautious approach, suggesting investors might consider waiting for a more favorable entry point, given the current valuation levels of Blackstone's shares.
In other recent news, Blackstone Group LP reported a 3% rise in its second-quarter distributable earnings, totaling $1.3 billion, driven by robust asset sales in its private equity and credit divisions. The firm's private equity unit saw a 16% increase in distributable earnings, while its credit arm posted a significant 51% jump. The firm noted approximately $40 billion in inflows to its funds and a record $34 billion in capital deployment from them during the quarter.
In a separate development, a former analyst with Goldman Sachs (NYSE:GS) and Blackstone Group Inc., Anthony Viggiano, has been sentenced to 28 months in prison for engaging in insider trading.
On the analyst front, Jefferies adjusted its price target for The Blackstone Group, lowering it to $138 from the previous $145, while sustaining a Buy rating on the stock.
Blackstone also announced organizational changes to its business segments and provided revised supplemental financial data for the first quarter. The firm's GP stakes business will now be included under the Private Equity segment, and the operations managed by Harvest Fund Advisors LLC have been moved to the Multi-Asset Investing segment.
In addition, Blackstone has sold Alinamin, a Japanese pharmaceutical company, to MBK Partners for approximately $2.17 billion, but will maintain a minority stake in the company.
These are recent developments from Blackstone.
InvestingPro Insights
As The Blackstone Group (NYSE: BX) navigates through a mix of financial outcomes, InvestingPro data and tips offer a deeper dive into the company's market performance and potential. According to InvestingPro, Blackstone is expected to see net income growth this year. This aligns with Citi's upward revision of EPS estimates, indicating a positive trajectory for the company's profitability. Additionally, despite revisions by 13 analysts who have lowered their earnings expectations for the upcoming period, Blackstone's trading patterns reveal a robust history, including maintaining dividend payments for 18 consecutive years and achieving a strong return over the last three months.
InvestingPro data highlights that Blackstone is trading at a high Price / Book multiple and near its 52-week high, suggesting investor confidence in its asset value and market position. Moreover, the company is not only expected to be profitable this year but has also been profitable over the last twelve months, reinforcing the healthy financial standing that Citi's report suggests.
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