BlackRock’s stock has slumped over the past four weeks, mirroring the performance of other private credit players such as Blue Owl, Apollo Global, and Blackstone. The shares peaked at $1,180 in August and have since fallen by nearly 10% from that high. Despite the pullback, the company’s strong fundamentals could support a rebound.
BlackRock’s business is doing well despite challenges
BlackRock has grown into the biggest asset manager in the world with over $15.3 trillion in assets under management. Its growth has accelerated in the past few years since crossing the $10 trillion milestone in 2021.
Part of this growth was because of its large acquisitions, including Global Infrastructure Partners (GIP), HPS, and ElmTree Funds. Its HPS buyout made it a big player in the private credit industry, where it has over $197 billion in assets.
The buyout, however, happened as investors were souring on the private credit industry as interest rates soared. For example, investors in a fund with $23 billion in assets pulled about 11.5% in the third quarter. On the positive side, there are signs that the redemption trend is easing.
The last earnings report showed that its revenue growth was accelerating. It added over $868 billion in net inflows in the previous 12 months. Its first half of the year had over $321 billion in inflows, driven by ETFs, private markets, and fixed income.
This growth pushed its revenue and profits higher. Total revenue rose by 31% to $7.05 billion, while its operating income soared by 42% to $2.4 billion. These numbers mean that BlackRock is still a growth company despite being in the business for years.
BlackRock’s earnings to demonstrate strong growth
The next important catalyst for BlackRock’s stock price will be its upcoming earnings, which will come out on October 14th.
Analysts believe the results will show that its growth continued in the third quarter. In this case, the revenue is expected to come in at $7.55 billion, up by 16% from a year earlier.
The earnings-per-share is also expected to jump from $11.55 to $14.25. Historically, BlackRock has always done better than expected, meaning that its revenue will likely be better than expected.
BlackRock has also become relatively undervalued, with the forward price-to-earnings ratio moving to 18.8, lower than the S&P 500 average of 19. These reasons explain why analysts are largely bullish on the company, with the average estimate being $1,304, up by 22% from the current level.
BlackRock stock technical analysis
The daily chart shows that BLK stock formed a double-top pattern at $1,180 and a neckline at $1,133. This pattern often leads to a bearish reversal, which explains why it slumped to $1,017.
The stock has held steady above the 200-day Exponential Moving Average (EMA) and is along the 38.2% Fibonacci Retracement level. It has formed a falling wedge pattern, which is made up of two falling and converging trendlines.
Therefore, the stock will likely have a bullish breakout, potentially to the key resistance level of $1,150.