BlackRock Rides on Private Market Growth: Is Now the Time to Buy BLK?

Last week, BlackRock Inc. BLK unveiled its plans to expand in private markets during an Investor Day conference. The company is targeting $400 billion in private markets fundraising by 2030, as it predicts that the private credit market could expand to $4.5 trillion in 2030 from $1.6 trillion last year.As the private credit market emerges as a lucrative sector in global finance, BlackRock has been strategizing to enhance its capabilities by integrating investments, technology, and data across the entire portfolio. During the conference, the company mentioned that it aims to double its operating income and market capitalization by 2030. BLK targets its adjusted operating income to double to $15 billion by 2030 and its market cap to reach $280 billion.Showing further optimism, management mentioned that it has set its annual revenue target at more than $35 billion for 2030, implying a five-year compound annual growth rate (CAGR) of 10%. In 2024, the company earned revenues of $20 billion. Further, in these five years, BlackRock expects organic base fee growth of 5% or more and its adjusted operating margin to be 45% or more.Factors That Will Aid BlackRock to Reach Its 2030 TargetsStrategic Acquisitions: BlackRock has been expanding its footprint in domestic and global markets through acquisitions. In March 2025, it purchased Preqin, a premier independent provider of private markets data, for almost $3.2 billion in cash to enhance its private markets offerings.In October 2024, BLK acquired Global Infrastructure Partners to enhance its infrastructure offerings and origination capabilities. In May 2024, it completed the buyout of the remaining 75% stake in SpiderRock, solidifying its separately managed accounts offerings. Further, in December 2024, the company announced a deal to acquire HPS Investment for $12.1 billion to foray deeper into the private credit market.These buyouts reflect a strategic expansion of the company’s Aladdin technology business into the rapidly growing private markets data segment. In 2023, the company took over London-based Kreos Capital. Besides these, in the past, the company has acquired numerous firms across the globe, strengthening its presence and market share. Product Diversification to Boost AUM: BlackRock has been focusing on diversifying its product suite and revenue mix, which has been improving its assets under management (AUM) over the years. The company’s inorganic growth strategy also contributed to AUM's growth.AUM witnessed a five-year (2019-2024) CAGR of 9.2%. The uptrend continued during the first quarter of 2025. As of March 31, 2025, BlackRock’s total AUM was a record $11.58 trillion, with net inflows of $83 billion. Last year, the company witnessed record net inflows of $641 billion, including industry-leading exchange-traded funds (ETF) net inflows of $390 billion. The momentum will likely continue as efforts to strengthen the iShares unit (offering more than 1,400 ETFs globally) and ETF operations and an enhanced focus on the active equity business are likely to offer support.This March, the company launched iShares Bitcoin on Xetra and Euronext Paris under the ticker IB1T and on Euronext Amsterdam under the ticker name BTCN. Last September, the company announced a collaboration with Partners Group to introduce a multi-private markets model solution, boosting retail investors’ accessibility to alternative investments.Also, last week, Jio BlackRock, a joint venture between BLK and India-based Jio Financial, received regulatory approval to operate as an investment adviser in India.Such product diversification efforts are likely to bolster the company’s revenue mix, reduce revenue concentration risk, and allow it to serve a broader range of clients, aiding AUM growth. The company’s GAAP revenues witnessed a CAGR of 7% over the last five years ended 2024, with momentum persisting in the first quarter of 2025.Additionally, the combination of HPS Investment, Preqin and GIP data with BLK’s alternative asset management platform, eFront, will drive solid revenue growth in the quarters ahead.Sales EstimatesImage Source: Zacks Investment ResearchBullish Analyst Sentiments for BLKOver the past month, the Zacks Consensus Estimate for 2025 and 2026 earnings of $44.75 and $50.46, respectively, has been revised marginally upward.Estimate Revision TrendImage Source: Zacks Investment ResearchThe projected figures imply growth of 2.6% and 12.8% for 2025 and 2026, respectively. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)How to Play BlackRock Stock NowOn the back of a solid balance sheet, BlackRock announced a 2% hike in the quarterly dividend to $5.21 per share in January 2025. BLK has increased its dividend five times in the last five years with an annualized dividend growth rate of 8.15%.Also, the company has a 46% dividend payout ratio, while its peers, SEI Investments SEIC and Invesco Ltd. IVZ, have 21% and 45% payout ratios, respectively.Dividend YieldImage Source: Zacks Investment ResearchAlso, BlackRock has a share repurchase plan in place. In the first quarter of 2025, the company repurchased $375 worth of shares. It aims to buy back shares worth $1.5 billion this year.In the past month, BLK shares have declined 2.2%, underperforming the S&P 500 index and the Zacks Finance sector but outperforming the industry. Additionally, the stock has outperformed its close peers — SEI Investments and Invesco.One-Month BLK Price PerformanceImage Source: Zacks Investment ResearchIn terms of valuation, BLK’s price-to-book ratio (P/B) of 3.13X is lower than the industry's 3.49X. Thus, the stock is trading at a discount. This suggests that investors may be paying a lower price relative to the company's expected earnings growth.Price-to-Book RatioImage Source: Zacks Investment ResearchFurther, BLK is inexpensive compared with SEI Investments’ P/B of 4.58X.  On the other hand, the company is trading at a premium compared with Invesco, which has a P/B of 0.58X.BlackRock’s growth initiatives have helped generate higher returns. This is demonstrated by the company’s return on equity (ROE) of 15.57% compared with the industry’s ROE of 10.60%.Return on EquityImage Source: Zacks Investment ResearchHowever, a steady rise in expenses is a headwind. The company recorded a five-year CAGR of 7.4% (ended 2024), mainly due to higher general and administrative (G&A) costs. The uptrend continued in the first quarter of 2025. Overall costs are expected to remain elevated due to the company’s business expansion plans and persisting inflationary pressures. Management expects core G&A expenses in 2025 to increase in the mid to high-single-digit percentage range.Further, given rising geopolitical risks, foreign currency fluctuations and the global impact of tariff policies, BlackRock may witness subdued overseas revenues, which will likely weigh on its growth.Nonetheless, BlackRock is well-positioned to capitalize on acquisitions and expand its presence in the fast-growing private markets. The record AUM level and product diversification efforts are other tailwinds. Moreover, lower valuation compared with the industry and bullish analyst sentiments are other positives.Thus, investors should watch out for the above-mentioned concerns and monitor how BlackRock integrates the acquisitions into its businesses before making any investment decision. Those who already own the stock can continue holding it for now.Currently, BLK carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BlackRock (BLK): Free Stock Analysis Report Invesco Ltd. (IVZ): Free Stock Analysis Report SEI Investments Company (SEIC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks