BlackRock’s BLK shares have been experiencing a good run on bourses lately. The stock is currently trading near its all-time high of $1,068.34 (touched on Nov. 11).

Over the past six months, BLK stock has gained 29.7%, outperforming the industry and the S&P 500 Index. Also, it has fared better than its close peers — T. Rowe Price Group, Inc. TROW and Invesco IVZ – in the same timeframe.

Six-Month Price Performance
 

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Technical indicators also suggest strength for BLK. The stock is trading above its 50-day and 200-day moving averages.

50-Day & 200-Day Moving Averages
 

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This signals robust upward momentum and price stability for BlackRock. It also underscores positive market sentiments and confidence in the company's financial health and prospects, which is expected to be driven by strategic expansion efforts.

Acquisitions to Enhance BlackRock’s Private Markets Capabilities

BlackRock has been on a buyout spree. In October, the company acquired Global Infrastructure Partners (“GIP”) for $3 billion in cash and around 12 million shares of BlackRock common stock. The deal to buy GIP, the leading global independent infrastructure manager, was announced in January. 

To complement the GIP deal, in June, BLK signed an agreement to acquire London-based Preqin, a premier provider of private markets data, for almost $3.2 billion (£2.55 billion) in cash. Preqin is expected to generate approximately $240 million in highly recurring revenues in 2024, reflecting solid growth of around 20% annually over the past three years.

These acquisitions represent a strategic expansion of BlackRock’s Aladdin technology business into the rapidly growing private markets data segment. This segment, which includes private equity, real estate, infrastructure and hedge funds, is projected to reach a total addressable market of $8 billion. 

By tapping into this market, BLK intends to unlock significant growth potential and provide unparalleled data and analytics solutions. The integration is expected to generate solid revenues as the company combines Preqin and GIP data with its alternative asset management platform, eFront, which facilitates the creation, management and monitoring of alternative asset portfolios.

Separately, in May, BlackRock acquired SpiderRock Advisors LLC, a leading provider of option overlay-based strategies for separately managed accounts (SMAs). This complements the Aperio acquisition, executed in 2021, further expanding the SMA offerings to fulfill unique client requirements.

Blackrock’s Efforts to Strengthen iShares and ETF Operations

BlackRock’s broad product diversification, revenue mix and steadily improving assets under management (AUM) balance are expected to continue boosting the top line. The company’s inorganic growth strategy has contributed to AUM's growth. AUM witnessed a five-year (2018-2023) CAGR of 10.9%. 

Over the same period, the company’s revenues (on a GAAP basis) witnessed a CAGR of 4.7%. The uptrend will likely continue as the company’s efforts to strengthen iShares and ETF operations (it received approval for spot Bitcoin and ether ETFs) and increased focus on the active equity business are expected to offer support.

Sales Estimates
 

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Further, the Federal Reserve's interest rate cuts complement BlackRock’s organic growth strategy of raising its AUM through diversified offerings and a strong revenue mix.

Bullish Analyst Sentiments for BLK

Analysts seem to be bullish about BlackRock’s prospects. It is witnessing northbound estimate revisions for the current and the next year.

Estimate Revision Trend
 

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These upward adjustments reflect a positive sentiment among analysts and suggest encouraging prospects. 

Earnings Estimates
 

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Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

BlackRock Stock Overvalued

Given the huge rally in BLK shares, it appears expensive relative to the industry. The stock is currently trading at a forward 12-month price/earnings (P/E) of 22.07X. This is above the industry’s 17.52X, reflecting a stretched valuation.

Price-to-Earnings F12M
 

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Also, BlackRock is trading at a premium compared with TROW and IVZ.

What to Do With BLK Stock?

BlackRock’s strong balance sheet, solid AUM balance, strategic expansion and collaborative efforts provide a strong foundation for growth. Moreover, as the Fed lowers interest rates, it will reinforce the company’s efforts to improve its AUM through product diversification.

Thus, given the fundamental strength and favorable macroeconomic dynamics, BLK stock remains a lucrative bet for investors now despite its lofty valuation.

BLK currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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