On Monday, Keefe, Bruyette & Woods (KBW) adjusted its price target for BlackRock Inc. (NYSE:BLK), reducing it from $1,225.00 to $1,160.00, while maintaining an Outperform rating on the shares. The adjustment comes ahead of BlackRock's earnings report, which is scheduled for this Wednesday, January 15, 2025. The firm is the first among asset managers and the broader capital markets to announce earnings for the quarter.
KBW's analysis suggests a mixed outlook for BlackRock's upcoming earnings. The firm's projections are slightly lower than the consensus for adjusted operating income, by 0.6%. However, they are more optimistic about long-term (LT) flows, anticipating $182.8 billion compared to the consensus of $159.6 billion.
InvestingPro data reveals that 9 analysts have revised their earnings downward for the upcoming period, while the company maintains strong fundamentals with a 50% gross profit margin and healthy current ratio of 2.56. KBW also forecasts a slightly higher fee rate of 15.2 basis points (bps) over the consensus of 15.1 bps.
The analyst from KBW anticipates that BlackRock's annual guidance will be somewhat complex due to several factors. These include the impact of the company's investment in Global Infrastructure Partners (GIP) in the fourth quarter, the acquisition of Preqin in the first half of 2025, and the partnership with Highbridge Principal Strategies (HPS) mid-year 2025.
Despite these complexities, KBW expects BlackRock to provide guidance for 2025 that excludes the impact of these deals, projecting flat headcount growth and low to mid-single-digit core general and administrative (G&A) expense growth. For 2025, KBW has modeled a 3.5% increase in core G&A expenses.
The analyst highlighted that the expected long-term flow results could be a significant positive factor for BlackRock, unless ongoing market pressures and macroeconomic concerns weigh on performance. The upcoming earnings report will likely provide investors with a clearer picture of BlackRock's financial trajectory and operational strategies for the year ahead.
In other recent news, BlackRock Inc. has made significant strategic moves. The company has announced plans to reduce its workforce by approximately 1% despite planning to onboard an additional 2,000 employees this year. This follows their $25 billion spending on acquisitions last year. The investment management firm has also raised its target to $1,180 due to the acquisition of HPS Investment Partners. Analysts from Evercore ISI maintain an Outperform rating on the stock.
Moreover, BlackRock has announced the acquisition of HPS Investment Partners, a global credit investment manager, for approximately $12 billion. The acquisition is expected to enhance BlackRock's private credit portfolio significantly. The transaction will increase BlackRock's total private market assets to $410 billion and is expected to slightly contribute to BlackRock's earnings per share by 2026.
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