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Will BlackRock stock beat consensus estimates in Q3? – Trefis

BlackRock (NYSE: BLK) is expected to release its results for the third quarter of fiscal 2021 on Wednesday, October 13. We expect BlackRock to beat consensus estimates for both revenue and profit. The asset management giant saw 32% year-on-year revenue growth in the second quarter of 2021, mainly driven by higher base fees and a significant increase in performance-based revenue. This is due to the strong inflows and growth in assets under management (AuM) during the quarter. Despite higher revenues, the company saw only 14% year-on-year growth in adjusted net profit due to higher taxes expenses. We expect the same trend to continue in the third quarter, with iShares and equity investments leading the growth in assets under management.

Our forecast indicates that BlackRock review is $ 967 per share, which is about 14% more than the current market price of about $ 844. Our interactive dashboard analysis on BlackRock Revenue Overview has more details.

(1) Expected revenue slightly higher than consensus estimates

BlackRock revenues for the full year 2020, amounted to $ 16.2 billion, up 11% year-on-year, mainly due to the increase in assets under management. This was in part due to headwinds in other sectors due to the Covid-19 crisis, which led to the diversion of funds to BlackRock.

  • The company saw a 4% year-on-year growth in income from equity investments, followed by an 8% increase in fixed income and a significant 57% jump in alternative investments. This could be attributed to higher amounts outstanding – total outstanding increased 17% year-on-year to $ 8.68 trillion at the end of December 2020. Total outstanding benefited from higher asset valuations and Net fund inflows of approximately $ 391 billion during the year.
  • The momentum continued into the first quarter of 2021, with the company reporting 19% year-on-year revenue growth to $ 4.4 billion. Investment advisory, administration fee and securities lending income from equity investments, which generates around 40% of total income, increased 26% year-on-year. This could be attributed to a 60% year-over-year increase in assets under management from equity to $ 4.75 trillion. Revenue increased 32% year-on-year to $ 4.8 billion in second quarter, boosted by 48% in equity investment income – stocks outstanding increased 43% to $ 5,000 billion. Overall, the company’s assets under management (AuM) reached $ 9.5 trillion in the second quarter, up 30% from a year ago and we expect it to maintain its growth path. on the coming months.
  • BlackRock Technology Services Revenue Grows 17% YoY to $ 1.1 billion dollars in 2020, mainly reflecting Aladdin’s rise in revenue. In addition, the segment grew by 12% in the first quarter, benefiting from the acquisition of Aperio. The same was true in the second quarter, with the segment posting growth of 14%. We expect it to continue the same trend in the following quarters.
  • Overall, we expect BlackRock’s revenue to stay around $ 18.9. billion for fiscal year 2021.

Trefis estimates BlackRock’s third quarter 2021 revenue to be around $ 4.95 billion, slightly above the consensus estimate of $ 4.90 billion. We expect growth in assets under management to boost third quarter results as well.

Going forward, we expect BlackRock to continue to generate revenue from improving its asset base. In addition, the flow of technology services is expected to maintain its positive growth. Our dashboard on BlackRock revenues offers more details on the company’s operating segments as well as our forecasts for the next two years.

2) EPS should exceed consensus estimates

BlackRock’s adjusted earnings per share (EPS) for the third quarter of 2021 is expected to be $ 9.94 per Trefis analysis, nearly 4% above the consensus estimate of $ 9.55. The increase in revenues in 2020 resulted in a 10% increase in adjusted net income. In addition, the profitability figure increased 49% year-on-year in the first quarter. That said, second quarter results were somewhat different, with the company only posting 14% net profit growth to $ 1.4 billion, which is far lower than revenue growth. This is due to a higher tax burden, due to legislation enacted in the UK increasing its corporate tax rate. We expect the same trend to continue in the third quarter.

Going forward, we expect BLK’s net margin figure to remain stagnant in fiscal 2021. However, its adjusted net profit is expected to rise to $ 5.8 billion, up 18%. year-on-year, leading to EPS of $ 37.68.

(3) Estimated share price 14% higher than current market price

We arrive at BlackRock review, using an EPS estimate of about $ 37.68 and a P / E multiple of just below 26x in fiscal 2021. This translates to a price of $ 967, or 14% above the current market price of around $ 844.

Note: P / E multiples are based on the stock price at the end of the year and reported (or expected) adjusted earnings for the entire year

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