2023-07-11 09:55:36 ET
Keefe, Bruyette & Woods analyst Michael Brown upgraded BlackRlock ( NYSE: BLK ), the world's largest asset manager, to Outperform from Market Perform given its diversification "yields better balance and margin resiliency than peers."
"BLK is an attractive way to play the impending surge of fixed income inflows, both on active and passive side — with particular strength to garner greater share as secular growth of passives continues," Brown wrote in a note to clients.
With the Federal Reserve boosting its federal funds rate by 500 basis points in a little over a year, BlackRock ( BLK ) stands to benefit from the "higher for longer" rate environment. "We see it as just a matter of time until fixed income flows accelerate," he said. And with passive expected to continue gaining share of the fixed income market, "we believe BlackRock is particularly well positioned."
The company is also stands to benefit from the shift to outsourcing through its "Outsourced CIO" capabilities and risk management technology from its Aladdin platform.
He also sees "vast opportunity" for growth, not only from passive fixed income, but also through international expansion, its wealth channel, and its private asset platform.
BlackRock ( BLK ) stock gained 0.8% in Tuesday morning trading.
The Outperform rating contrasts with the SA Quant rating of Hold and aligns with the average SA Analyst rating and average Wall Street rating , both at Buy.
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BlackRock upgraded to Buy at KBW as diversification yields 'better balance'