Today, BlackRock is expected to announce its financial results for the first quarter of 2023. The multinational company is expected to beat consensus estimates for revenue and earnings.
The company beat last quarter’s estimates, although total revenue fell 15% year-on-year to $4.3 billion (€3.9 billion). Revenue suffered from lower assets under management due to lower market valuations and negative currency fluctuations. Notably, average assets under management fell 14% year-on-year to $8.4 trillion (€7.6 trillion). We expect the same trend to continue in the first quarter.
BlackRock is valued at around $750 (€680) per share, or 12% more than the current market price. The interactive BlackRock Earnings Overview dashboard has more details.
1. Revenue is expected to exceed consensus estimates
BlackRock’s revenue fell 8% year-on-year to $17.9 billion (€16.2 billion) in fiscal 2022.
Base fees and performance fees, which together contribute approximately 85% of total revenue, were reduced by 9% during the year. This decrease was attributed to a decrease in assets under management, which decreased by 14% year-on-year. We expect first quarter results to be similar.
BlackRock’s technology services fees increased 6% in 2022, and we expect the segment to continue its growth trajectory in the first quarter.
Overall, we expect BlackRock’s revenue to reach $18.4 billion (€16.7 billion) in fiscal year 2023.
Trefis estimates that BlackRock’s revenue in the first quarter of 2023 will be around $4.2 billion (€3.8 billion), up 1% from consensus estimates of $4.18 billion.
2. Earnings per share are expected to slightly exceed expectations
First-quarter 2023 adjusted earnings per share for BlackRock is expected to be $7.86 according to Trefis analysis, slightly above the consensus estimate of $7.72. Adjusted net income fell 12% year-over-year to $5.2 billion ($4.7 billion) in fiscal 2022 due to negative top-line growth. We expect net margin to improve in the first quarter.
3. Estimate the share price is 12% higher than the current market price
We arrive at BlackRock’s valuation using EPS (earnings per share) of around $33.50 and a price-to-earnings ratio of just over 22x for fiscal 2023. That translates to a price of $750 (€681), or 12% more than the current market price of close to 670. dollars (608 euros).
Note: The price-to-earnings ratio is based on the year-end stock price and adjusted earnings reported (or projected) for the full year.
Translated article from the American magazine Forbes – the author: Trefis Team
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