Categories Analysis, Finance

BlackRock (BLK) ends FY23 on a high note. What’s in the cards

The company has signed an agreement to acquire infrastructure investment fund Global Infrastructure Partners

BlackRock, Inc. (NYSE: BLK), a leading provider of investment and risk management solutions, had a strong start to fiscal 2024 with about $10 trillion of assets under management (AUM). Aladdin, the company’s portfolio management software and investment management platform, is widely used as an investment management tool.

Shares of the New York-based company made steady gains in the past three months, before entering 2024 on a flat note. It has grown 10% in the last six months alone. BlackRock has a good track record of returning cash to shareholders. After raising the dividend regularly over the years, it offers a better-than-average yield of 2.7% now. There is ample room for BLK to grow further, and it would be a good idea to add the stock to the watchlist.

Impressive Outcome

In the final three months of fiscal 2023, clients entrusted total net inflows of $96 billion with the company, raising the full-year value to $289 billion. Total revenue increased 7% year-over-year to $4.63 billion in the December quarter and topped expectations. Adjusted profit, excluding one-off items, increased to $9.66 per share from $8.93 per share in Q4 2022. Earnings beat estimates for the sixth consecutive quarter. On an unadjusted basis, net income rose to $1.38 billion or $9.15 per share.

Over the years, BlackRock has maintained strong bottom-line performance, reflecting the steady increase in assets under management. The company is well ahead of its rivals in terms of AUM growth, thanks to diversified product offerings that range from exchange-traded funds to index funds. Investors keep an eye on net inflows, a measure of how much cash goes out of the company and how much comes in, to get an idea about the general health of the business.

Commenting on the Q4 results, BlackRock’s CEO Laurence Fink said, “The combination of BlackRock infrastructure with GIP will make us the second largest private markets infrastructure manager with over $150 billion in total AUM, providing clients – especially those saving for retirement – with the high-coupon, inflation-protected, long-duration investments they need. “We are incredibly excited about this next chapter in BlackRock’s history. This ambitious transformation of our firm positions us better than ever. Our clients, shareholders, and employees will be its biggest beneficiaries.

In Expansion Mode

Recently, the company signed an agreement to acquire infrastructure investment fund Global Infrastructure Partners. The $12-billion deal, which complements its increasing focus on infrastructure, is expected to set a new paradigm for private market investing and create the world’s second-largest infrastructure firm. Meanwhile, as part of the efforts to reallocate resources, the company has revealed plans to lay off around 3% of its workforce.

BlackRock’s stock ended the last session around $800, after trading higher throughout the day. The stock has lost about 13% since retreating from the peak around two years ago.

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