Blackstone Stabilizes on AUM Growth - Analyst Blog

On Jun 16, 2014, we issued an updated research report on The Blackstone Group L.P. BX. Growth in assets under management (AUM) and diversified revenue mix will likely continue to support its financials. However, mounting expenses and high dependence on advisory fee-based revenues make us apprehensive.

Further, Blackstone's strong presence across the globe and its broad diversification will continue to aid organic growth. Also, given the company's superior position in the alternative investment space, we anticipate steady AUM growth and consequent improvement in the top line.

Blackstone's first-quarter economic net income of 70 cents per share outpaced the Zacks Consensus Estimate by 25%. Results benefited from a rise in top line, partially offset by higher expenses.

On the flip side, mounting operating expenses remain a major concern at Blackstone. Going forward, we expect this trend to persist with increasing compensation and benefit costs as the company's well-performing funds require more headcount.

Further, the Zacks Consensus Estimate over the last 30 days has shown mixed movements. For 2014, the Zacks Consensus Estimate increased nearly 1% to $3.12 per share, while for 2015 it declined roughly 1% to $3.40 per share.

Presently, Blackstone has a Zacks Rank #3 (Hold).

Stocks That Warrant a Look

Some better-ranked investment management stocks include Woori Finance Holdings Co., Ltd. WF, Cohen & Steers Inc. CNS and Ameriprise Financial, Inc. AMP. While Woori Finance and Cohen & Steers sport a Zacks Rank #1 (Strong Buy), Ameriprise holds a Zacks Rank #2 (Buy).

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