On January 9, 2013, we upgraded
The Blackstone Group LP
) to Outperform based on this asset manager's strong fund raising
ability and sound expansion activities.
Why the Upgrade?
Over the last 90 days, the Zacks Consensus Estimate for 2012 has
increased nearly 11.0%. In addition, the company has delivered
three positive earnings surprises in the last four quarters with
an average beat of 18.1%. These factors are the primary driving
force behind the recommendation revision.
Blackstone is anticipated to announce its fourth quarter 2012
results on January 31. The Zacks Consensus Estimate for the
fourth quarter is pegged at 46 cents on revenue expectation of
$1,120 million. The company had delivered better-than-expected
third-quarter earnings on the back of augmented top line,
partially offset by higher expenses.
Further, Blackstone's robust expansion initiatives (organic and
inorganic), powerful asset under management growth, solid fund
raising ability and capital deployment actions were among the
positives. The company has been successfully raising money for
many of its newly launched funds despite a challenging fund
raising environment for asset managers. This is expected to
sustain the company's AUM growth over the next several quarters.
Moreover, the company has uninvested capital of $36 billion as of
September 30, 2012, which is expected to be meaningfully deployed
going forward. Also, at a time when most of the companies are
undertaking cost reduction initiatives to bring down operating
expenses, Blackstone has been witnessing declining expenses
without resorting to such efforts. We believe that improving
operating efficiency would aid the bottom-line growth in the
The earnings ESP (expected surprise prediction) - the percentage
difference between the Most Accurate Estimate and the Zacks
Consensus Estimate - for the company is 0.00% for the fourth
quarter. This, along with its Zacks Rank #3 (Hold), indicates
that the company is expected to report in line with the Zacks
Other Stocks to Consider
Other stocks in the finance sector that are performing well and
are worth considering include
AllianceBernstein Holding L.P.
Virtus Investment Partners, Inc
). Both are Zacks Rank #1 (Strong Buy) stocks.
ALLIANCEBERNSTN (AB): Free Stock Analysis
BLACKSTONE GRP (BX): Free Stock Analysis
VIRTUS INVESTMT (VRTS): Free Stock Analysis
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