What To Expect From BlackRock Stock In Q3?

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BlackRock (NYSE: BLK) is scheduled to report its fiscal Q3 2022 results on Thursday, October 13, 2022. We expect BlackRock revenues and earnings to decrease on a year-on-year basis, but top the consensus estimates. The asset management behemoth missed the estimates in the last quarter, with its top-line decreasing 6% y-o-y. The revenues mainly suffered due to a drop in total investment advisory, administration fees & securities lending revenue (base fees), and lower performance fees. It was because of an unfavorable decrease in assets under management (AuM). Notably, the AuM decreased by 15% from $10 trillion at the end of December 2021 to $8.5 trillion at the end of Q2 2022. We expect the same trend to continue in the third-quarter results. 

We estimate BlackRock’s valuation to be around $693 per share which is 26% above the current market price. Our interactive dashboard analysis on BlackRock’s Earnings Preview has more details. 

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

BlackRock’s revenues for the full-year 2021 grew 20% y-o-y to $19.4 billion. It was primarily driven by strong growth in the equity investment category and total client assets.

  • The company’s Assets under Management (AuM) were $10 trillion at the end of Q4 2021, which was 15% more than the level seen at the end of December 2020. It resulted in a 21% y-o-y rise in the total investment advisory, administration fees, and securities lending revenue to $15.3 billion. However, the trend changed in the first two quarters of 2022. The total revenues for the first half were at the same level as the year-ago figure, primarily because of a decrease in AuM. We expect the third-quarter results to be on similar lines.
  • BlackRock technology services and distribution fees improved by 12% and 34% respectively in 2021. However, the growth slowed down in the first half of 2022. We expect the same pattern to continue in the third quarter.
  • Overall, we expect BlackRock’s revenues to remain around $18.6 billion for FY2022.

Trefis estimates BlackRock’s fiscal Q3 2021 revenues to be around $4.33 billion, slightly above the $4.23 billion consensus estimate. 

2) EPS is likely to top the consensus estimates

BlackRock Q3 2022 adjusted earnings per share (EPS) is expected to be $8.13 per Trefis analysis, almost 6% above the consensus estimate of $7.66. The top line improved in 2021, leading to a 20% increase in the adjusted net income to $5.9 billion. However, the adjusted net income was reduced by 2% y-o-y to $2.5 billion in the first half of 2022, due to higher expenses as a % of revenues. We expect the expense figure to slightly decrease in the third quarter.

BlackRock is likely to report an adjusted net income of $5 billion and an annual EPS of $33.07 for the full-year 2022. 

(3) Stock price estimate is 26% more than the current market price

We arrive at BlackRock’s valuation, using an EPS estimate of around $33.07 and a P/E multiple of close to 21x in fiscal 2022. This translates into $693, which is 26% more than the current market price of close to $550. 

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 

With inflation rising and the Fed raising interest rates, BlackRock has fallen 40% this year. Can it drop more? See how low can BlackRock stock go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Oct 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 BLK Return 0% -40% 45%
 S&P 500 Return 2% -24% 63%
 Trefis Multi-Strategy Portfolio 3% -24% 200%

[1] Month-to-date and year-to-date as of 10/10/2022
[2] Cumulative total returns since the end of 2016

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