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Here's What Saudi Arabia's Investment With Blackstone Means For The Stock

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Here's What Saudi Arabia's Investment With Blackstone Means For The Stock

Commenting on Saudi Arabia's investment in an infrastructure floated by Blackstone Group LP (NYSE: BX), Citi said in a note that the impressive infrastructure initiative alters the narrative. Accordingly, the firm upgraded shares of Blackstone.

The News

Blackstone announced on May 20 it has signed a memorandum of understanding with the Public Investment Fund of Saudi Arabia, or PIF, regarding the launch of a new investment vehicle related to infrastructure. The company said an anchor $20 billion contribution would come from PIF. Apart from PIF's contribution, Blackstone expects to mobilize another $20 billion from other investors.

Impressive Event

Citi analyst William Katz said it is an impressive event and should serve as a valuation catalyst.

"After lagging peers YTD, as: 1) tax reform seemingly has faded, and investors fretter over Real Estate — we believe this raise not only alters the narrative on the stock, but is likely to get investors to refocus on Core Plus RE waterfall economics more explicitly," the analyst said.

Upgrading, Lifting Price Target

As such, Citi raised its rating on the shares of Blackstone to Buy and raised its 12-month price target for the shares to $40 from $32, with the recent price target representing 26 percent upside from current levels.

Explaining the new valuation, Citi said $3 per share is attributable to higher FRE multiple and $5 per share to reflect NPV related to the capital raise.

At the time of writing, Blackstone shares were up 6.29 percent at $31.75.

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Latest Ratings for BX

DateFirmActionFromTo
Jul 2020UBSMaintainsBuy
Jul 2020Morgan StanleyMaintainsOverweight
Jul 2020Credit SuisseMaintainsOutperform

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