On Wednesday, Jefferies adjusted its price target for The Blackstone Group (NYSE:BX), lowering it to $138 from the previous $145, while sustaining a Buy rating on the stock.
The firm noted a slight decrease in their second quarter 2024 estimated Distributable Earnings per share (DE/shr) to $0.98 from $1.03. This revision follows observations of increased activity towards the end of the quarter in both the Private Equity (PE) and Real Estate (RE) sectors, including an earlier-than-anticipated second-quarter close of the company's investment in AIRC.
The firm's forecast for Blackstone's Fee-Related Earnings (FRE) stands at $1.32 billion, which translates to a 57.5% margin, slightly up from 57.2% in the previous quarter. This estimate aligns with management's previous statements expecting margin stability.
In the retail sector, Blackstone Private Equity (BXPE) reported inflows of over $1.6 billion during the second quarter, amounting to $4.3 billion since inception. Meanwhile, Blackstone Credit (BCRED) experienced a significant increase in inflows, reaching a two-year high with $3.4 billion in the second quarter, surpassing the first quarter's $2.9 billion.
Despite facing a surge in redemption requests at the end of May, which rose by approximately 70% month-over-month to around $1.6 billion, Blackstone Real Estate Income Trust (BREIT) managed to moderate these requests to near two-year lows in June, with $803 million in redemptions. This increase in May followed actions by another large non-listed REIT, Starwood's SREIT, which had restricted redemptions.
However, since February, BREIT has successfully met 100% of redemption requests, indicating a recovery from earlier pressures.
In other recent news, Blackstone Inc. has announced organizational changes and updated financial data for the first quarter of 2024. The firm restructured its business segments, moving its GP stakes business to the Private Equity segment and shifting the operations managed by Harvest Fund Advisors LLC to the Multi-Asset Investing segment. These changes aim to streamline operations and provide clearer financial information to investors.
In addition, Blackstone has been active in mergers and acquisitions. The firm sold Alinamin, a Japanese pharmaceutical company, to MBK Partners for approximately $2.17 billion, but will maintain a minority stake in the company. Furthermore, Blackstone's takeover proposal for Infocom, a Japanese digital comic distributor, is under review. The acquisition, valued at about $1.78 billion, could represent Blackstone's largest investment in Japan to date.
On the analyst front, Citi maintained a neutral stance on Blackstone's stock, with the price target unchanged at $124.00. The firm slightly reduced its second-quarter 2024 earnings per share estimate for Blackstone to $1.04 from the previous $1.08.
Lastly, Blackstone plans to double the size of its European private credit fund within the next year, following a successful raise of 1 billion euros ($1.07 billion). These are recent developments in Blackstone's operations and strategic direction.
InvestingPro Insights
Following Jefferies' recent price target adjustment for The Blackstone Group (NYSE:BX), it's valuable to look at the company through the lens of current InvestingPro data and tips. With a market capitalization of $147.56 billion and a robust revenue growth of 129.76% over the last twelve months as of Q1 2024, Blackstone exhibits a strong financial position. The company's P/E ratio stands at 42.66, which, when paired with a PEG ratio of just 0.18 for the same period, suggests that the stock is trading at a low price relative to near-term earnings growth potential.
InvestingPro Tips highlight that Blackstone's net income is expected to grow this year, and analysts predict the company will be profitable, supporting the thesis of sustained financial performance. Additionally, the company has shown a commitment to shareholders by maintaining dividend payments for 18 consecutive years, despite a slight dip in dividend growth over the last twelve months. With these insights, investors can better gauge the investment opportunity that Blackstone presents.
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