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BlackRock Shares Off After Stronger-Than-Expected Earnings

BlackRock's shares fell as investors took profits after six straight record closes. The massive money manger's quarterly revenue gained 13%.
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BlackRock  (BLK) - Get BlackRock Inc. Report shares fell on Thursday even after the giant New York money manager reported stronger-than-expected fourth-quarter earnings.

Investors took profits after the stock had closed at records for six sessions in a row.

BlackRock recently traded at $754.84, down 3.5%. But it had soared 50% in the past year, as investors rushed to participate in booming financial markets. 

BlackRock's assets under management climbed to a record $8.68 trillion in the fourth quarter.

As for the earnings, profit rose to $1.55 billion, or $10.02 a share, in the quarter from $1.3 billion, or $8.29, in the year-earlier quarter. Adjusted earnings per share climbed to $10.18 from $8.34, beating the FactSet analyst consensus of $9.14.

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Revenue jumped 13% to $4.48 billion, besting the analyst consensus of $4.27 billion.

Morningstar analyst Greggory Warren puts fair value at $620 for BlackRock.

“Unlike many of its competitors, the firm is currently generating solid organic growth with its operations, with its iShares platform, which is the leading domestic and global provider of ETFs, riding a secular trend toward passively managed products that began more than two decades ago,” he wrote in October.

“This has helped the company maintain above-average levels of annual organic growth despite the increased size and scale of its operations.”

Further, “although we expect the secular and cyclical headwinds to make [assets under management] growth difficult for the U.S.-based asset managers over the next five to 10 years, we still see BlackRock generating 3%-5% average annual organic AUM growth, with slightly higher levels of revenue growth on average and stable adjusted operating margins (39%-40% of revenue) during 2020-2024,” Warren said.