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BlackRock Q2 Profit Surges Over 20%; Buy With Target Price of $630

By:
Vivek Kumar
Updated: Apr 17, 2022, 11:50 UTC

BlackRock Inc said its second-quarter profit surged over 20%, largely driven by a boost in fixed income and continued momentum in cash management.

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BlackRock Inc, an American global investment management corporation based in New York City, reported that its second-quarter profit surged over 20%, largely driven by a boost in fixed income and continued momentum in cash management.

The world’s largest asset management company said its fixed-income funds took in $60.27 billion in new money and cash-management business received over $24.2 billion in net inflows. The asset manager reported $7.32 trillion in assets under management (AUM) by the quarter ended in June, up from $6.84 trillion just a year ago.

BlackRock’s net income jumped to 1.214 billion, or $7.85 a share in the second quarter, up from $1.003 billion, or $6.41 per share, a year earlier. The stock market rebounded in the three months from the coronavirus sell-off in March, boosting BlackRock’s AUM.

Executive comment

“BlackRock’s globally integrated asset management and technology platform generated $100 billion of total net inflows in the second quarter, representing 10% annualized organic base fee growth. iShares fixed-income ETFs and BlackRock’s active equity strategies both saw record inflows, and leadership in cash solutions drove strength inflows as clients sought liquidity,” Laurence D. Fink, Chairman and CEO said in a press release.

“Momentum also continued in sustainable strategies and illiquid alternatives, where we are investing for future growth.”

BlackRock stock forecast

Ten analysts forecast the average price in 12 months at $608.89 with a high forecast of $633.00 and a low forecast of $552.00. The average price target represents a 7.40% increase from the last price of $566.96. From those 10, nine analysts rated ‘Buy’, one rated ‘Hold’ and none rated ‘Sell’, according to Tipranks.

Morgan Stanley target price is $630 with a high of $969 under a bull scenario and $317 under the worst-case scenario. BlackRock had its price objective boosted by equities researchers at Citigroup to $630 from $570; Wells Fargo raised the price target from $605 to $615 and suggests a potential upside of more than 10%.

Other equity analysts also recently updated their stock outlook. Barclays boosted their target price on shares of BlackRock from $515 to $580 and gave the company an “overweight” rating. Bank of America increased its forecast from $600 to $633 and gave the company a “buy” rating. However, Deutsche Bank lowered their target price on shares of BlackRock from $565 to $563 and set a “hold” rating.

We second Morgan Stanley and Citigroup on BlackRock stock outlook. We also think it is good to buy at the current level and target at least $630 as 50-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Analyst view

“We believe BlackRock is best positioned on the asset management barbell given leading iShares ETF platform, multi-asset & alts combined with technology/Aladdin offerings that should drive 10% EPS CAGR (2020-22e) via 4.5% average LT organic growth & continued op margin expansion. We see further growth ahead for Alts, iShares, international penetration, and the institutional market in the US,” said Michael Cyprys, equity analyst at Morgan Stanley.

“We expect premium to widen as BlackRock takes share in the midst of market dislocation and executes on improving organic revenue growth trajectory,” he added.

Upside and Downside risks

Growth in highly scalable iShares franchise driving margin expansion and strong EPS growth; Further growth in tech & high fee products such as alts, active equities, and multi-asset, Morgan Stanley highlighted as upside risks to BlackRock.

Market share loss in ETFs; lack of positive op leverage in declining markets; Worse than expected base fee pressure through pricing initiatives or mix shift; Greater regulatory scrutiny; liquidity challenges in products, Morgan Stanley highlighted as downside risks.

About the Author

Vivek completed his education from the University of Mumbai in Economics and possesses stronghold in writing on stocks, commodities, foreign exchange, and bonds.

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