BlackRock Earnings: Improved Flows Offset by Market Losses and Adverse Currency

Key Morningstar Metrics for BlackRock

• Fair Value Estimate: $1,100.00
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: High

What We Thought of BlackRock’s Earnings

We do not expect to alter our fair value estimate of $1,100 per share for BlackRock BLK after its fourth-quarter and full-year results came in more or less in line with our expectations. While the company continues to trade at a hefty premium relative to the price/earnings multiples of other US-based traditional asset managers (which we think is warranted), its shares (much like those of most of its peers) are not offering enough of a margin of safety to recommend them.

BlackRock closed December 2024 with a record $11.551 trillion in assets under management, up 0.7% sequentially and 15.4% year over year. This was slightly below our forecast for $11.791 trillion, as better-than-expected flows during the quarter were offset by higher market losses and more adverse currency exchange than we expected. Net long-term inflows of $201 billion were $44 billion higher than we forecast, as retail, institutional, and exchange-traded fund flows were slightly higher than our expectations. BlackRock’s annualized organic AUM growth rate was 7.6% for the fourth quarter, outside the upper end of our annual target of 3%-5% and better than our 5.9% forecast.

While average long-term AUM rose 23.1% year over year during the quarter, BlackRock reported a 22.5% increase in base fee revenue growth as its realization rate improved due to a product mix shift. Total revenue was up 22.6% for the quarter and 14.3% for the full year, in line with our expectations. BlackRock posted a 200-basis-point year-over-year increase in full-year GAAP operating margin to 37.1%, in line with our forecast. On an adjusted basis, the firm’s 2024 operating margin was 44.5%, compared with 41.7% in 2023.