BlackRock, Inc. BLK reported fourth-quarter adjusted earnings per share of $6.08 Wednesday, missing the Street's estimate of $6.28.
Despite the miss — attributed largely to lower non-operating and higher seasonal and other expenses — the company exhibited strong core trends during the quarter and continues to be positioned for above-average growth, according to Bank of America Merrill Lynch.
The Analyst
Analyst Michael Carrier maintains a Buy rating on BlackRock with a price target lifted from $444 to $490.
The Thesis
BlackRock’s revenue declined more than expected and adjusted operating margins contracted to 44.2 percent. Adjusted expenses were marginally higher than expected. Total flows were above $50 billion, with long-term inflows increasing to $44 billion and money market flows turning positive.
BlackRock’s revenue outlook seems to be improving, given rising markets, healthy inflows, a more stable fee rate and strong growth in tech revenues, Carrier said in a Wednesday note.
The investment firm announced a $60-million restructuring to revamp its workforce, the analyst said. Adjusted expenses are expected to decline in Q1, and the company could benefit from modest operating leverage in 2019, with lower G&A and comp ratio over time, he said.
“Lastly, we expect superior organic growth to continue given ETF strength, mostly favorable investment performance, global distribution, a strong illiquid pipeline, a focus on solutions and investments in technology."
Price Action
BlackRock shares were down 0.64 percent at $410.65 at the time of publication Thursday.
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