Blackstone's Track Record For Investment Return Under Spotlight: Analyst Raises Forecast

BMO Capital Markets analyst Étienne Ricard reiterated the Market Perform rating on Blackstone Inc. BX, raising the forecast to $101 from $95.

According to the analyst, the company’s earnings growth appears set to resume in 2024, underpinned by flagship fundraising benefits and a more constructive environment for realizations.

Layering in more meaningful private wealth net flows, the stock offers mid-teens FRE growth prospects leading to 2025, Ricard adds.

That being said, the 33x implied fee-related earnings valuation fully reflects improved optimism, per the analyst.

In its recently reported fourth quarter, Blackstone’s Distributable earnings rose 4% to $1.39 billion, beating expectations and showcasing strength amid market volatility.

The company declared a dividend of $0.94 and repurchased shares, emphasizing effective capital allocation.

On BREIT, the analyst sees the fund return to positive NAV growth in the first half of 2024, supported by rising gross sales (which were likely at trough levels in the third or fourth quarter of 2023) combined with lower repurchases.

The analyst highlights BX’s track record for investment return, strategy breadth across asset classes, and distribution channel diversification, which provide enhanced fundraising consistency across the market cycle.

That being said, valuation fully reflects expectations for mid-teens fee-related earnings growth and offers a balanced risk-reward on the stock, the analyst adds.

Price Action: BX shares are trading higher by 0.73% to $124.39 on the last check Friday.