BlackRock Shares Rise Nearly 4% as Earnings and Revenue Tops Views; Target Price $966

BlackRock shares rose about 4% on Wednesday after the world’s largest asset manager reported better-than-expected earnings and revenue in the third quarter, primarily driven by strong demand for its actively managed and sustainable funds as well as high performance fees.

The New York-based multinational investment management corporation reported quarterly earnings of $10.95 per share, beating the Wall Street consensus estimates of 9.70 per share. The asset manager also posted revenues of $5.05 billion for the quarter ended September 2021. That was above the market expectations of $5.0 billion.

The company said a 16% increase in revenue year-over-year reflects strong organic growth and a 13% growth in technology services revenue, despite lower performance fees. There were long-term net inflows of $98 billion led by ETFs and active strategies, with total net inflows of $75 billion due to outflows from low-fee cash management and advisory assets under management (AUM).

By the end of the September quarter, BlackRock’s assets under management totalled $9.46 trillion, up from $7.81 trillion a year ago, but flat compared to the previous quarter. That was disappointing as most analysts predicted assets would exceed $10 trillion.

BlackRock shares rose about 4% to $867.81 on Wednesday. The stock rose over 20% so far this year.

Analyst Comments

“Having taken a deeper look at our long-term projections for wide-moat-rated BlackRock following the company’s release of third-quarter earnings, we’ve raised our fair value estimate to $910 per share from $880. Most of the improvement came from adjustments to our longer-term forecasts for the company’s multi-asset and alternatives segments–two areas management has targeted for higher levels of growth over the next five to 10 years,” noted Greggory Warren, Sector Strategist at Morningstar.

“While we had lifted our projections for both segments in June following BlackRock’s investor day presentations, we felt that our forecasts were a bit too conservative (especially considering the more recent rates of organic growth we’ve seen from both segments).”

BlackRock Stock Price Forecast

Eight analysts who offered stock ratings for BlackRock in the last three months forecast the average price in 12 months of $966.63 with a high forecast of $1,039.00 and a low forecast of $803.00.

The average price target represents an 11.39% change from the last price of $867.81. From those eight analysts, seven rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $1,026 with a high of $1,417 under a bull scenario and $465 under the worst-case scenario. The firm gave an “Overweight” rating on the investment manager’s stock.

Several other analysts have also updated their stock outlook. Evercore ISI lowered the target price to $950 from $956. JPMorgan cut the price objective to $1,015 from $1,052. Deutsche Bank slashed the target price to $1039 from $1117. Jefferies lowered the price target to $978 from $1075.

“Following BlackRock’s (BLK) 3Q21 results, our 4Q21 EPS declines by $0.10 (modestly higher G&A) and our 2022 EPS estimate remains unchanged. Organic base fee growth remains diversified and well above the long-term target (+9% vs ~5% target). Although investment spend is on the rise, it is fueling industry-leading organic growth through expansion of the company’s geographic footprint and investment capabilities,” noted Daniel T. Fannon, equity analyst at Jefferies.

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