BlackRock Stock To Top The Estimates In Q1

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BlackRock

BlackRock (NYSE: BLK) is scheduled to report its fiscal Q1 2023 results on Friday, April 14, 2023. We expect BlackRock to top the consensus estimates for revenues and earnings. The company outperformed the estimates in the last quarter, despite a 15% y-o-y decrease in the total revenues to $4.3 billion. The top line suffered due to a drop in assets under management (AuM) because of lower market valuations and negative foreign exchange movement. Notably, the average AuM decreased 14% y-o-y to $8.4 trillion. We expect the same trend to continue in the first quarter.

We estimate BlackRock’s valuation to be around $750 per share which is 12% 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 edge past the consensus estimates

BlackRock’s revenues fell by 8% y-o-y to $17.9 billion in FY2022. 

· The base fees and performance fees, which collectively contribute around 85% of the total revenues, were reduced by 9% in the year. It was due to lower Assets under Management (AUM) – down 14% y-o-y. We expect the first-quarter results to be on similar lines.

· BlackRock technology services fees grew 6% in 2022, and we expect the segment to continue its growth trajectory in Q1.

· Overall, we forecast BlackRock’s revenues to touch $18.4 billion in FY2023.

Trefis estimates BlackRock’s fiscal Q1 2023 revenues to be around $4.2 billion, 1% above the $4.18 billion consensus estimate. 

2) EPS to marginally beat the consensus estimates

BlackRock Q1 2023 adjusted earnings per share (EPS) is expected to be $7.86 per Trefis analysis, slightly above the consensus estimate of $7.72. The adjusted net income was reduced by 12% y-o-y to $5.2 billion in FY2022 due to negative growth in the top line. We expect the net income margin to see some improvement in Q1. Overall, BlackRock is likely to report an annual GAAP EPS of $33.50 for the full-year 2023.

(3) Stock price estimate is 12% higher than the current market price

We arrive at BlackRock’s valuation, using an EPS estimate of around $33.50 and a P/E multiple of just above 22x in fiscal 2023. This translates into a price of $750, which is 12% higher than the current market price of close to $670. 

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 

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 Apr 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 BLK Return 0% -5% 76%
 S&P 500 Return 0% 7% 84%
 Trefis Multi-Strategy Portfolio 1% 9% 242%

[1] Month-to-date and year-to-date as of 4/12/2023
[2] Cumulative total returns since the end of 2016

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