Vtrade Proposes to BUY BlackRock, Inc. ( NYSE: BLK )

BlackRock, Inc.

NYSE: BLK

COMPANY DESCRIPTION

BlackRock, Inc. engages in the provision of investment management, risk management, and advisory services for institutional and retail clients worldwide. Its products include single and multi-asset class portfolios investing in equities, fixed income, alternatives, and money market instruments.

The company was founded by Ralph L. Schlosstein, Susan L. Wagner, Robert Steven Kapito, and Laurence Douglas Fink in 1998 and is headquartered in New York, NY.

RECOMMENDATION

We rate BlackRock, Inc a BUY. Below are the basic reasons to recommend this stock as a BUY.

·       BlackRock has expanded largely both domestic and overseas. In the recent past, the company announced deals to Citi Banamex’s Asset Management business in Mexico. Apart from these, over the years, the company has acquired several firms across the globe, thus expanding its footprints.  Nonetheless, the acquisition of Barclays Global Investors in 2009 remains the biggest deal by far. With a strong liquidity position, the company remains well positioned to grow through opportunistic acquisitions.

·       BlackRock has completed the acquisition of Tennenbaum Capital Partners, LLC bolstering BlackRock’s position as a leading global credit manager and enhancing its ability to provide clients with private credit solutions across a range of risk level, liquidity and geography. TCP brings significant experience in middle market performing credit and special situations investing with seasoned investment talent and a strong long-term track record to the BlackRock global credit platform. Clients of both firms will benefit from enhanced scale, a broader origination network, and a premium and expanded set of private credit capabilities.

·       BlackRock’s Global Credit team now manages more than $90 billion in client assets across multi-strategy credit, leveraged finance, and private credit with a combined platform of more than 200 employees globally. This asset base includes TCP’s approximately $9 billion of committed client assets. TCP’s nearly 90-person team has joined BlackRock and will continue to be responsible for managing TCP products, including the investments of TCP Capital Corp. (NASDAQ: TCPC), a business development company.

·       BlackRock’s strong global presence, broad product diversification, revenue mix and steadily improving AUM will enable it to boost revenues. Its inorganic growth strategy has attributed to most of the company’s AUM growth, depicting a six-year CAGR of 10.6% (2012-2017). Also, the company’s revenues (on a GAAP basis) saw a CAGR of 6%, over the same time frame. Similar uptrend continued for both during the first six months of 2018. Gradual improvement in the market conditions, efforts to strengthen the iShares and ETF operations, higher AUM and increased focus on active equity business will likely further aid revenue growth.

·       BlackRock’s sturdy capital deployment activities look impressive. The company hikes dividend annually. Further, it has an active share repurchase program in place. In January 2017, the company authorized an additional 6 million worth of share repurchases under its existing share buyback plan. Its earnings power will likely allow it to continue returning capital to shareholders.

LAST EARNINGS

BlackRock’s second-quarter 2018 adjusted earnings of $6.66 per share outpaced the Consensus Estimate of $6.60. Also, the bottom line was 28% higher than the year-ago quarter.

Results benefited from an improvement in revenues, rise in assets under management and steady long-term inflows. However, an increase in operating expenses acted as a headwind. Net income (on a GAAP basis) was $1.07 billion, up 26% from the prior-year quarter.