Evercore ISI has maintained its Outperform rating on BlackRock, Inc. (NYSE: NYSE:BLK) with a consistent price target of $995.00, following the asset manager's robust third-quarter performance.
BlackRock surpassed both Evercore ISI's and the consensus estimates, attributed to a 15% year-over-year increase in revenue. This surge included significantly higher performance fees, which were double the street estimates, and a 5% growth in organic base fees. Additionally, the company's technology services Annual Contract Value (ACV) expanded by 15%.
BlackRock reported substantial net inflows totaling $160 billion, marking a 6% rate increase. These inflows were distributed across various segments, with $97 billion in ETFs, $56 billion from institutional investors, and $7 billion contributed by retail.
The firm's Assets Under Management (AUM) climbed 26% year-over-year to an impressive $11.5 trillion. This growth was fueled by the strong inflows and market growth that provided a 3.5% tailwind heading into the fourth quarter of 2024.
The company's adjusted operating margin saw a significant rise of 350 basis points, reaching 45.8%. However, the growth in expenses and a higher tax rate moderated the year-over-year earnings per share (EPS) growth to 5%. Some challenges noted included a decrease in the fee rate, largely due to the influx of ETF assets, and areas of underperformance, specifically in fundamental equities and municipal bonds.
BlackRock's growth has been notable, leveraging its technology, product range, and global distribution scale to achieve profitable expansion. The firm is also evolving its private markets offerings, working on a model portfolio solution aimed at democratizing retail access to private markets. Additionally, BlackRock recently completed its acquisition of GIP on October 1st, adding $116 billion to its AUM—a 16% increase since the announcement of the deal—and $70 billion of future pipeline AUM.
In other recent news, BlackRock has hit a record high in assets under management (AUM), reaching $11.48 trillion. This achievement marks the third consecutive quarter of record numbers, driven by a significant surge in inflows to the company's exchange-traded funds (ETFs) and a robust equity rally. BlackRock's AUM jumped from $9.10 trillion the previous year and from $10.65 trillion in the second quarter. The firm saw a substantial influx of long-term net flows, totaling $160 billion for the quarter.
BlackRock also announced an increase in net income, which rose to $1.63 billion, or $10.90 per share, for the three months ending September 30. This is up from $1.60 billion, or $10.66 per share, in the same period last year. In addition, TD Cowen raised its price target on BlackRock's shares from $960 to $1,077, maintaining a Buy rating.
In other recent developments, BlackRock completed strategic transactions, including the acquisition of Green Investment Group and the anticipated finalization of the Preqin deal. These are integral to the company's growth strategy. BlackRock also teamed up with banking giant Santander (BME:SAN) to invest up to $1 billion annually in various financing opportunities.
Furthermore, in collaboration with Microsoft Corp (NASDAQ:MSFT), BlackRock announced a joint fund exceeding $30 billion, aimed at bolstering artificial intelligence infrastructure. This partnership is set to invest in data centers and energy projects essential for the computational demands of AI.
InvestingPro Insights
BlackRock's strong performance, as highlighted in the article, is further supported by real-time data from InvestingPro. The company's market capitalization stands at an impressive $141.55 billion, reflecting its dominant position in the asset management industry. BlackRock's revenue growth of 7.68% over the last twelve months aligns with the 15% year-over-year increase mentioned in the article, indicating sustained growth momentum.
InvestingPro Tips reveal that BlackRock has raised its dividend for 14 consecutive years, demonstrating a commitment to shareholder returns that complements its robust financial performance. This is particularly relevant given the company's strong inflows and AUM growth discussed in the article. Additionally, BlackRock is trading near its 52-week high, which correlates with the positive outlook presented by Evercore ISI and the company's outperformance in the third quarter.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips that could provide deeper insights into BlackRock's financial health and market position.
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