2024-07-11 15:14:55 ET
Summary
- BlackRock is a leading asset management firm with strong revenue growth potential through AUM expansion and performance fees in hot markets.
- Valuation analysis suggests a fair value for BlackRock's share price, with upside potential in a hot market but risks from market downturns and rising competition.
- While BlackRock's growth is priced in, its differentiation, data capabilities, and diversification efforts make it a strong hold.
QOE Capital - Co-Authored by Analyst Antonio Mello
Investment Thesis
BlackRock ( BLK ) is one of the world's preeminent asset management firms, premier provider of investment management, and leading providers of investment, advisory and risk management solutions. BlackRock seems poised to continue scaling its Assets Under Management, which ultimately drives large revenue growth for the firm. Additionally, its AUM allows for guaranteed revenue through its fixed management fees from its sticky customer base, while allowing for potentially larger revenue streams through its performance fees. If markets remain hot, BlackRock's investments are likely to deliver even stronger value for clients, in turn, potentially triggering performance-based fees.
While the company’s business model is intriguing, it is not enough to justify a buy rating on BlackRock. The company is witnessing most of its growth through their Assets Under Management expansion, however, this may already be priced in. Additionally, on a comparables analysis basis, BlackRock is trading at a high premium when compared to its competitors. While they trade at a premium, this can be overlooked as they typically outperform in expanding their AUM, which fuels top line growth, and are differentiated in their data and technology capabilities....
Read the full article on Seeking Alpha
For further details see:
BlackRock Leads The Charge In An Expanding Market