BlackRock's stock has slipped into a correction, falling nearly 10% from its August peak of $1,180. The decline mirrors weakness across the private credit sector, with peers like Blue Owl, Apollo Global, and Blackstone also under pressure. Despite the pullback, the world's largest asset manager continues to post robust operational results, and upcoming earnings could provide a catalyst for a recovery.
Business fundamentals remain solid
BlackRock now manages over $15.3 trillion in assets, a figure that has grown rapidly since crossing the $10 trillion mark in 2021. This expansion has been fueled by strategic acquisitions, including Global Infrastructure Partners (GIP), HPS, and ElmTree Funds. The HPS deal positioned BlackRock as a major player in private credit, a segment where it now holds more than $197 billion in assets.
However, the timing of the HPS acquisition coincided with rising interest rates, which dampened investor appetite for private credit. In the third quarter, a fund with $23 billion in assets saw outflows of about 11.5%. Still, there are signs that redemption pressures are easing, and BlackRock's overall inflows remain strong.
In the trailing twelve months, BlackRock attracted over $868 billion in net inflows, with $321 billion coming in the first half of the year alone, driven by ETFs, private markets, and fixed income. This momentum has translated into impressive financials: total revenue rose 31% year-over-year to $7.05 billion, while operating income jumped 42% to $2.4 billion. These figures underscore that BlackRock continues to operate as a growth company despite its maturity.
Earnings preview: expectations high
The next major test for the stock comes on October 14, when BlackRock reports third-quarter earnings. Analysts project revenue of $7.55 billion, a 16% increase from the same period last year, and earnings per share of $14.25, up from $11.55. Historically, BlackRock has tended to beat consensus estimates, suggesting the actual results could be even stronger.
Valuation also appears attractive. The forward price-to-earnings ratio stands at 18.8, below the S&P 500's average of 19. This has led most analysts to maintain bullish ratings, with an average price target of $1,304, implying roughly 22% upside from current levels.
Technical outlook: bullish signals emerge
From a technical perspective, the daily chart shows a double-top pattern at $1,180, with a neckline at $1,133, which typically signals a bearish reversal. The stock subsequently fell to $1,017, but it has since held above the 200-day exponential moving average and is trading near the 38.2% Fibonacci retracement level. A falling wedge pattern, characterized by converging trendlines, has formed, often indicating a potential bullish breakout. If the pattern plays out, the stock could target the key resistance at $1,150.
Given the combination of solid fundamentals, reasonable valuation, and constructive technical setup, BlackRock appears well-positioned to rebound as earnings approach. Investors will be watching closely to see if the company can deliver another beat and restore confidence in the stock.
This article is for informational purposes only and does not constitute financial advice.
