On May 19, 2014, we issued an updated research report on
). The rise in assets under management (AUM) and opportunistic
acquisitions will likely continue to support its financials.
However, mounting expenses and high dependence on fee-based
revenues make us apprehensive.
BlackRock's first-quarter earnings of $4.43 per share outpaced the
Zacks Consensus Estimate by 7.8%. Results benefited from rise in
revenues, partially offset by higher expenses.
Further, BlackRock's strong presence across the globe and its broad
diversification will continue to aid organic growth. Also, the
company's initiatives for the iShares and exchange-traded fund
(ETF) business will further help in expanding its top line.
Also, BlackRock is an attractive pick for yield-seeking investors,
given its strong capital deployment activities. In Jan 2014, the
company announced a 15% hike in dividend to $1.93 per share.
Further, the company has a steady share repurchase program in
On the flip side, mounting operating expenses remain a major
concern. BlackRock continues to witness higher expenses due to
increased marketing costs as well as a rise in compliance costs. We
believe that this would continue to hamper bottom-line growth going
Further, the Zacks Consensus Estimate over the last 30 days has
shown mixed movements. For 2014, the Zacks Consensus Estimate
increased nearly 1% to $18.45 per share, while for 2015 it declined
0.4% to $21.01 per share.
Presently, BlackRock has a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Some better-ranked investment management stocks include
Affiliated Managers Group Inc.
Woori Finance Holdings Co., Ltd.
Cohen & Steers Inc.
). All of these have a Zacks Rank #1 (Strong Buy).
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