What To Expect From BlackRock Stock In Q2?

by Trefis Team
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BlackRock (NYSE: BLK) is scheduled to report its fiscal Q2 2021 results on Wednesday, July 14. We expect BlackRock to beat the consensus estimates for revenues and earnings. The firm posted better than expected results in the first quarter of 2021, mainly driven by growth in its Assets under Management (AuM) and technology services revenues. The AuM benefited from positive net inflows of $172 billion, net market appreciation, and the acquisition of Aperio. We expect the same trends to continue in the second quarter, as well.

Our forecast indicates that BlackRock’s valuation is around $883 per share, which is slightly more than the current market price of $877. Look at our interactive dashboard analysis on BlackRock’s pre-earnings: What To Expect in Q2? for more details. 

(1) Revenues expected to be marginally ahead of the consensus estimates in Q2

Trefis estimates BlackRock’s fiscal Q2 2021 revenues to be around $4.62 billion, marginally above the $4.61 billion consensus estimate. The company reported 11% y-o-y revenue growth in 2020, mainly driven by the increase in AuM. The same momentum continued in the first quarter of 2021, too, with the firm reporting $4.4 billion in revenues – up 19% y-o-y. Further, BLK’s Investment advisory, administration fees, and securities lending revenue from equity investments, which contribute close to 40% of the top-line, increased 26% y-o-y. It was driven by a 60% y-o-y rise in equity AuM to $4.75 trillion by the quarter-end. Notably, the unusually high growth was due to lower equity AuM in the first quarter of 2020 because of lower asset valuations and a significant drop in fund inflows. Additionally, the company reported a 12% y-o-y growth in technology services revenues. We expect the AuM and technology services stream to continue their growth trajectory in the second quarter, as well.

Despite the Covid-19 crisis, BlackRock has reported better than expected earnings in each of the four quarters of 2020. The company’s asset base has grown in the last year, which is likely to continue in 2021 as well. Overall, its revenues are expected to touch $18.3 billion in FY2021. Our dashboard on BlackRock revenues offers more details on the company’s segments.

2) EPS likely to beat the consensus estimates

BlackRock Q2 2021 adjusted earnings per share (EPS) is expected to be $9.55 per Trefis analysis, 2% above the consensus estimate of $9.34. The company’s profitability figures grew in 2020, thanks to the revenue growth. Further, the firm adjusted net income improved 49% y-o-y in the first quarter, due to lower total expenses and higher revenues. We expect the same trend to continue in the second quarter, as well.

Moving forward, we expect BLK’s net income margin figure to remain around the same level as the 2020 figure for the current year. However, its adjusted net income is likely to increase to $5.6 billion – up 14% y-o-y, leading to an EPS of $36.51.

(3) Stock price estimate marginally more than current market price

Going by our BlackRock valuation, with an EPS estimate of around $36.51 and a P/E multiple of close to 24x in fiscal 2021, this translates into a price of $883, which is just above the current market price of around $877.

Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year

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