On Friday, Evercore ISI maintained its Outperform rating and a $900.00 price target for BlackRock, Inc. (NYSE:BLK), following the company's first-quarter earnings report. The asset management giant reported adjusted earnings per share (EPS) of $9.81, surpassing both the firm's and the consensus estimates of $9.01 and $9.38, respectively.
This increase was attributed to higher performance fees and slightly lower expenses. Additionally, BlackRock's assets under management (AUM) saw a year-over-year increase of 15%, with revenue growth of 11% mainly driven by higher market valuations, organic base fee growth, and technology services revenue, resulting in a margin expansion of 180 basis points over the previous year.
The company experienced $76 billion in inflows, exceeding the Street's reduced forecasts. These inflows were predominantly seen in ETFs, which accounted for $67 billion, while retail and institutional segments added $9 billion in the first quarter. Over the last twelve months, these segments have remained relatively stable.
The inflows were well-distributed across various products, with fixed income taking the lead at $42 billion, followed by $18 billion in equities, $12 billion in currency and commodities, and $5 billion in multi-asset products.
Management's outlook was optimistic, highlighting accelerating client activity and visibility into the funding of significant mandates in wealth management, institutions, and Aladdin, BlackRock's proprietary investment management platform.
The company noted substantial growth opportunities in infrastructure, technology, retirement, and whole portfolio solutions. This positive sentiment is bolstered by the fact that the ending AUM for the quarter was 1.7% higher than the average AUM during the quarter.
However, the report also noted a 6% decline in the fee rate, mainly due to the growth in ETFs, a 10% decrease in securities lending revenue, and some seasonal outflows in money market funds.
Despite these challenges, the overall tone of the report suggested that the results were more favorable than the negative sentiment anticipated prior to the earnings release, and the management's commentary on the client pipeline and momentum was hard to discount.
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