Up 10% Since The Beginning Of 2023, What Should You Expect From BlackRock Stock?

+14.15%
Upside
747
Market
853
Trefis
BLK: BlackRock logo
BLK
BlackRock

BlackRock’s stock (NYSE: BLK) has gained roughly 11% since the beginning of 2023, as compared to the 27% rise in the S&P500 index over the same period. Further, at its current price of $789 per share, the stock is trading 8% below its fair value of $853 – Trefis’ estimate for BlackRock’s valuation

Amid the current financial backdrop, BLK stock has seen little change, moving slightly from levels of $720 in early January 2021 to around $790 now, vs. an increase of about 30% for the S&P 500 over this roughly 3-year period. Overall, the performance of BLK stock with respect to the index has been lackluster. Returns for the stock were 27% in 2021, -23% in 2022, and 15% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 – indicating that BLK underperformed the S&P in 2022 and 2023. In fact, consistently beating the S&P 500 – in good times and bad – has been difficult over recent years for individual stocks; for heavyweights in the Financials sector including V, JPM, and MA, and even for the megacap stars GOOG, TSLA, and MSFT. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could BLK face a similar situation as it did in 2022 and 2023 and underperform the S&P over the next 12 months – or will it see a strong jump?

The company surpassed the consensus estimates in the fourth quarter of 2023. It posted total revenues of $4.63 billion – up 7% y-o-y, mainly due to a 6% growth in the base fees (total investment advisory, administration fees & securities lending revenue). Further, the average assets under management (AuM) increased 11% y-o-y to $9.38 trillion in the quarter. On the cost front, the operating expenses as a % of revenues witnessed a favorable drop, leading to an operating margin of 34.2% vs, 32.9% in Q4 2022. Overall, the adjusted net income improved 9% y-o-y to $1.38 billion.

Relevant Articles
  1. Rising 24% In The Last Six Months, How Will BlackRock Stock Trend After 2024 Q1 Results?
  2. Up 10% In The Last Six Months, Does BlackRock Stock Have More Room For Gains?
  3. Will BlackRock Stock Top The Estimates In Q3?
  4. BlackRock Stock Topped The Earnings Consensus In Q2
  5. BlackRock Stock To Beat The Street Expectations In Q2
  6. BlackRock Stock To Top The Estimates In Q1

The top line marginally decreased to $17.86 billion in 2023. It was primarily because of lower distribution fees and base fees, offsetting the positive growth in technology services revenue. Further, the operating margin slightly decreased to 35.1% in the year. However, the negative impact was more than offset by a jump in non-operating income from -$95 million to $880 million. It resulted in an adjusted net income of $5.5 billion – up 6% y-o-y.

Moving forward, we expect the Q1 2024 results to be on similar lines. Overall, BlackRock revenues are estimated to touch $20 billion in FY2024. Additionally, BLK’s adjusted net income margin is likely to see some drop as compared to last year, resulting in an annual GAAP EPS of $39.00. This coupled with a P/E multiple of just below 22x will lead to a valuation of $853.

 Returns Jan 2024
MTD [1]
Since start
of 2023 [1]
2017-24
Total [2]
 BLK Return -3% 11% 107%
 S&P 500 Return 3% 27% 118%
 Trefis Reinforced Value Portfolio 2% 41% 621%

[1] Returns as of 1/30/2024
[2] Cumulative total returns since the end of 2016

Invest with Trefis Market-Beating Portfolios
See all Trefis Price Estimates