BlackRock (Ticker Symbol: BLK) released earnings late last week that fell short of analysts’ expectations. The world’s largest asset manager reported an earnings per share miss of $6.41 per share vs. Wall Street analysts’ of $6.52 per share. Additionally, BlackRock released a slight revenue miss of $3.52 billion vs. Wall Street analysts’ expectations of $3.55 billion. Unfortunately for shareholders, the asset manager had a decrease in almost all of its areas of revenue generation except for in technology services.
During the quarter, BlackRock saw inflows of over $125 billion bringing the total amount of assets under Management (AUM) for Blackrock to nearly $6.8 trillion. BlackRock announced earlier this year that they would be implementing a new approach for their longer-term investors. The asset manager is reportedly raising more than $10 billion dollars for one of its new private equity funds. That particular fund’s objective is to replicate the investment approach and methodology of Warren Buffet’s legendary investment firm, Berkshire Hathaway.
Above is a chart of BlackRock’s stock price over the past two and a half years. BlackRock’s stock started 2017 slightly negative, finding support at its 200-day Moving Average multiple times in the first and second quarter. It took off in the third quarter of 2017, rallying almost 50% and trading to an all-time high of $594.52 early in the first quarter of 2018. BlackRock was not as fortunate for the bulk of 2018 and began a massive downtrend giving back all of the stock gains from the previous year.
Late in the fourth quarter of 2018, BlackRock’s stock began to form a bullish divergence pattern, where the stock makes a lower low in price, but the Relative Strength Index makes a higher low, as indicated on the chart by the purple circles. Traders and investors sometimes look at divergences for a possible pause within the current trend, which can at times lead to a reversal, as occurred in BlackRock’s case. After putting in a bullish divergence, the stock broke through its downtrend from 2018 and began to trade back above its 100 and 200-Day Moving Averages. Currently, the stock is up just over 22% for the year.
(Chart above courtesy of www.tipranks.com)
Based on a survey of 9 analysts offering 12-month price targets, the average price target for Blackrock’s stock is $512.75. According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $473.55.
BlackRock continues to gradually grow the assets under its management, reaffirming its status as the world’s largest asset manager. Long-term investors are being rewarded for holding BlackRock’s stock through its capital appreciation and its yearly payouts through dividends. Investors in the asset managing space should look to Northern Trust Corporation’s (Ticker Symbol: NTRS) earnings release on July 24th for fresh news within the sector.