BlackRock’s BLK shares are in the spotlight as the company continues expanding its presence in the lucrative private markets through acquisitions. In 2024, BLK stock soared 26.3%. In the same timeframe, the Zacks Investment Management industry and the S&P 500 Index rallied 33.8% and 24.4%, respectively.
2024 Price Performance
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2 Major Factors Influencing BlackRock Stock
Acquisitions Driving BlackRock’s Private Markets Push: BlackRock was on a buyout spree last year. In December 2024, this global asset manager signed an agreement to acquire HPS Investment Partners for about $12 billion in a third major deal to bolster its presence in private markets. In October, the company closed the acquisition of Global Infrastructure Partners (“GIP”), a leading global independent infrastructure manager. The deal was announced in January 2024.
To complement the GIP deal, in June, BLK signed an agreement to acquire London-based Preqin, a premier provider of private markets data. In 2024, the company spent approximately $28 billion to strengthen its private markets offerings.
These acquisitions represent a strategic expansion of BlackRock’s Aladdin technology business into the rapidly growing private markets data segment. Once the HPS Investment deal wraps up in mid-2025, the company is expected to manage almost $220 billion in private credit assets. Many of BlackRock's competitors in the alternative asset management business, like Apollo Global Management APO, Blackstone BX and Ares Management ARES, have made more significant strides in private markets. As of Sept. 30, 2024, Apollo managed $598 billion in credit assets, while Ares oversaw $335 billion. Additionally, Blackstone managed a total of $432 billion across its extensive credit platform as of the same date.
By tapping into this lucrative market, BLK intends to unlock significant growth potential and provide unparalleled data and analytics solutions. The integration is expected to generate solid revenues as the company combines HPS Investment, Preqin and GIP data with its alternative asset management platform, eFront, which facilitates the creation, management and monitoring of alternative asset portfolios.
In May, BlackRock acquired SpiderRock Advisors LLC, a leading provider of option overlay-based strategies for separately managed accounts (SMAs). This complements the Aperio acquisition, executed in 2021, further expanding the SMA offerings to fulfill unique client requirements.
Blackrock’s Efforts to Strengthen iShares and ETF Operations: BlackRock’s broad product diversification, revenue mix and steadily improving assets under management (AUM) balance are expected to continue boosting the top line. The company’s inorganic growth strategy has also contributed to AUM's growth. AUM witnessed a five-year (2018-2023) CAGR of 10.9%.
Over the same period, the company’s revenues (on a GAAP basis) witnessed a CAGR of 4.7%. The uptrend will likely continue as the company’s efforts to strengthen the iShares unit (offering more than 1,400 ETFs globally) and ETF operations (it received approval for spot Bitcoin and ether ETFs) and increased focus on the active equity business are expected to offer support.
Further, the Federal Reserve's interest rate cuts complement BlackRock’s organic growth strategy of raising its AUM through diversified offerings and a strong revenue mix. Also, the post-election surge in enthusiasm for Bitcoin is immensely benefiting the company. The inflows into the company’s spot Bitcoin exchange-traded fund have pushed iShares Bitcoin Trust past $50 billion in assets in just 11 months following its launch in mid-January 2024.
Analyst Sentiments Bullish for BLK
Analysts seem to be bullish about BlackRock’s prospects. The company’s sales and earnings are expected to grow in the near term.
Sales Estimates
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Earnings Estimates
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Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
BlackRock Stock Overvalued
Given the rally in BLK shares, it appears expensive relative to the industry. The stock is, at present, trading at the forward 12-month price/earnings (P/E) of 21.26X. This is above the industry’s 17.90X, reflecting a stretched valuation.
Price-to-Earnings F12M
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How to Play BLK Stock in 2025?
Per BlackRock’s projections, the global private credit market is valued at $1.5 trillion currently and is expected to reach $4.5 trillion by 2030. Thus, the business is expected to be lucrative for the company.
Private Credit AUM by 2030
Image Source: BlackRock, Inc.
Further, BlackRock’s strong balance sheet, solid AUM balance and strategic expansion and collaborative efforts provide a strong foundation for growth. Moreover, as the Fed lowers interest rates, it will reinforce the company’s efforts to improve its AUM through product diversification.
However, investors should be cautious about BlackRock’s lofty valuation and keep an eye on how the company’s private markets bets pay off over time. BLK currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
