BlackRock Stock Topped The Consensus In Q4, What’s Next?
BlackRock’s stock (NYSE: BLK) has gained 3% YTD as compared to the 2% rise in the S&P500 index over the same period. Further, at its current price of $730 per share, the stock is trading 3% below its fair value of $750 – Trefis’ estimate for BlackRock’s valuation. The world’s largest asset manager outperformed the consensus estimates of revenues and earnings in the fourth quarter of 2022. It posted total revenues of $4.3 billion – down 15% y-o-y, mainly due to the impact of lower market valuations and negative FX movement on assets under management (AuM). The total investment advisory, administration fees & securities lending revenue (base fees) decreased 14% y-o-y to $3.4 billion. Notably, the average AuM was down by 14% y-o-y to $8.4 trillion. Overall, the adjusted net income fell by 23% y-o-y to $1.26 billion, partly due to a drop in the top line and partly due to higher operating expenses as a % of revenues.
The total revenues decreased by 8% y-o-y to $17.9 billion in FY 2022. It was primarily driven by a 5% drop in the base fees, followed by a 55% decline in the performance fees. On the flip side, the top line was somewhat supported by a 6% rise in technology service revenues. Altogether, the adjusted net income decreased 12% y-o-y to $5.2 billion.
Moving forward, we expect the AuM to remain under pressure for some more time due to tough macroeconomic conditions. Markedly, consensus estimates for Q1 2023 revenues and earnings are $4.22 billion and $7.96 respectively. All in all, BlackRock revenues are forecast to touch $18.37 billion in FY2023. Additionally, BLK’s adjusted net income margin is likely to see a slight drop in the year, resulting in an adjusted net income of $5 billion and an annual GAAP EPS of $33.50. This coupled with a P/E multiple of just above 22x will lead to a valuation of $750.
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| Returns | Jan 2023 MTD [1] |
2023 YTD [1] |
2017-23 Total [2] |
| BLK Return | 3% | 3% | 92% |
| S&P 500 Return | 2% | 2% | 74% |
| Trefis Multi-Strategy Portfolio | 5% | 5% | 231% |
[1] Month-to-date and year-to-date as of 1/20/2023
[2] Cumulative total returns since the end of 2016
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