BLK

Now is the time when the vast majority of large financial institutions miss their previous profit standards, citing still very high interest rates by central banks and increased risks of consumer loans defaults that hamper demand for credit products. That's why recent Q4 earnings reported by U.S. banking giants, including Bank of America, Citigroup and Morgan Stanley on January 12-15, became a source of disillusionment for Wall Street crowds, even though most banks had taken extra money management precautions ahead of their anticipated decline in income. Job cuts over the whole segment and many billions that leaked to federal deposit insurance funds for solving the problems with mid-sized lenders contributed to big sharks' losses. However, investment banks are rather standing apart from the stormy weather, thanks to reliance on exchange-traded assets trading.

Globally, BlackRock has more than $10 trillion assets under management, being the largest fund manager in the world. Last week it posted $9.66 of quarterly EPS (equity per share), beating consensus forecasts of $8.72. Whatsoever, its profit level declined from $10.91 in Q3, but it was 4% and 8% higher, compared to Q2 and on an annual basis, respectively. Besides, its funds got inflows of $96 billion from October to December to contribute 33% to the $289 billion for the full year. This confirmed BlackRock's super power of capital attraction against a challenging financial landscape.

Its prevailing specialisation of investment management and financial services is going to gain momentum due to an acquisition of Global Infrastructure Partners (GIP). To deepen BlackRock strategy, it would buy GIP for $12.5 billion to integrate it into its own line-up of client's offerings. GIP is acclaimed for its investments in sectors such as energy, transportation, and waste management. The move would power BlackRock’s portfolio with notable assets, like a stake in London's Gatwick Airport, a part of the U.S. liquefied natural gas export market and wastewater services in France, to continue its expansion after Barclays acquisition in 2009. The current deal includes $3 billion in cash and 12 million BlackRock shares. GIP's founding partners will become major shareholders in BlackRock, owning about 8% of the company as well. This markedly enhances BlackRock’s private-market operations to potentially double its management fees in this sector, BlackRock CEO Larry Fink said.

Cementing BlackRock's dominance in global asset management, this may allow the share price of the investment giant to aim for new targets. Unlike other banking stocks, BlackRock did not fall but gained 14.5% in 2023. The pool of Wall Street analysts estimate a 12-month price target for BlackRock above $877 to leave nearly 11% room to rise.