Analysts expect BlackRock, already the world's largest fund manager, to become even bigger.

Wall Street expects BlackRock Inc BLK.N to report another record for assets under management when it reports second-quarter earnings on Monday, thanks to rising markets and solid fund flows. BlackRock managed a record $10.47 trillion as of March.

BlackRock's best-known low-fee exchange-traded funds saw "healthy" equity and fixed-income flows in the second quarter, Citigroup (C.N) analyst Christopher Allen said in a July 3 report. Allen, who has a "buy" rating on BlackRock shares, said he expects flows to actively managed funds to be "mixed."

Here are analysts surveyed by FactSet's expectations for closely watched metrics in BlackRock's second-quarter 2023 earnings report.

Adjusted net income is expected to be $1.47 billion, compared with $1.4 billion in the same period last year;

Adjusted earnings per share are expected to be $9.96, compared with $9.28 in the same period last year;

Revenue is expected to be $4.85 billion, compared to $4.46 billion in the same period last year;

Assets under management are expected to be $10.67 trillion, compared with $9.43 trillion in the same period last year;

Net long-term fund flows are expected to be $88.8 billion, compared with $57 billion in the same period last year;

Overall net flows are expected to be $114.6 billion, compared with $80.16 billion in the same period last year;

Base expenses are expected to be $3.89 billion, compared with $3.6 billion a year ago.

BlackRock shares typically perform well when the stock market is rising. But shareholders haven't been rewarding the company lately. BlackRock's stock is up 3.5% this year, while the S&P 500 has risen 18% to a record high. BlackRock's stock is down 15% from its high set in late 2021.

The underperformance comes as BlackRock fell short of its key long-term target of 5 percent organic underlying fee growth. "This growth and the path back to 5 percent remain a point of debate for investors," Goldman Sachs (GS.N) analyst Alex Blostein, who has a buy rating on BlackRock, wrote after the company's first-quarter earnings report in April.

Investors and companies focus on base fees because they are a proxy for the company's momentum and ability to manage client assets, its core function. It represents the fees BlackRock receives for managing money (excluding performance fees) and accounts for the vast majority of total revenue.

JPMorgan Chase & Co. analyst Ken Worthington, who has a "neutral" rating on BlackRock shares, wrote to clients on July 9 that his team raised its forecast for total assets under management by 2% due to better market conditions at the end of the second quarter. However, Worthington noted that equities drove most of the gains, while fixed-income returns were "mediocre."

In recent years, BlackRock and rival traditional asset managers have prioritized diversification away from their bread and butter products — low-fee funds that track public markets — as fees on those products have fallen.

That means expanding into more lucrative areas such as private markets and software sales. BlackRock said on June 30 it would spend $3.2 billion to buy data provider Preqin, which dominates the opaque market for selling private market analytics, and combine it with BlackRock’s massive Aladdin platform.

BlackRock, led by co-founder and Chief Executive Officer Larry Fink, also said earlier this year it would acquire private infrastructure investment firm Global Infrastructure Partners.

Investors will be listening for details on BlackRock's private markets expansion during its earnings call Monday morning. Morgan Stanley analyst Michael Cyprys, who has an overweight view on BlackRock's stock, said he will be listening for comments on the company's private markets expansion as well as fixed income and organic growth opportunities.

Article forwarded from: Jinshi Data