Skip to Content
Stock Analyst Update

Positive Flows and Market Gains Lift BlackRock's AUM

We expect to increase our fair value estimate for the wide-moat firm.


While there was little in wide-moat BlackRock's (BLK) fourth-quarter earnings to alter our long-term view of the firm, we expect to increase our fair value estimate to $550 per share to account for our expectations for better AUM levels and fees than we had been forecasting for the near to medium term. BlackRock closed out the December quarter with a record $7.430 trillion in managed assets, up 6.7% (24.3%) sequentially (year over year), with both organic growth and market gains contributing to AUM growth during the period. Net long-term inflows of $99.0 ($335.7) billion during the quarter (full year) were fueled by $20.6 ($109.9) billion of active fund flows, $3.2 ($42.3) billion of inflows from the firm's institutional index business and $75.2 ($183.5) billion in inflows from iShares. BlackRock's annual organic growth rate of 6.1% during 2019 was better than both management's ongoing annual organic growth rate target of 5% and our long-term forecast calling for 3%-5% annual organic AUM growth.

Average long-term AUM growth of 4.3% (16.1%) sequentially (annually) during the fourth quarter translated into an 11.2% (1.9%) increase in base fee revenue growth, as the company lapped a really difficult fourth quarter of 2018 (which also suppressed top-line growth the first couple of quarters of 2019). Total revenue was up 15.8% when compared with the prior-year's quarter and increased 2.4% on a full-year basis (better than our forecast calling for flattish revenue growth during 2019--much of which can be tied to stronger performance fee and technology and risk management revenue). As for profitability, BlackRock posted a 20-basis-point (70-basis-point) decline in full-year operating margins (when looked at on an adjusted basis) to 38.2% during 2019. Even so, we continue to project a slight expansion in the firm’s operating margins during 2020-24, driven not only by the increased scale of BlackRock's operations but the efficiencies created by ongoing technology investments.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Greggory Warren does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.