Thursday, January 17, 2013

BlackRock Reports FY and Q4 2012 Results

BlackRock reported Q4 2012 and full year results on January 17th, 2013. Q4 EPS of $3.96 beat analyst estimates of $3.70 by $0.26. The strong quarter and the beat was driven by assets under management (AUM) expansion in fixed income products and ETFs. ETF consumers positively reacted to BlackRock’s first ever TV marketing campaign during the quarter. AUM inflows were strong from both institutional and retail investors.

Many of BlackRock’s goals came together during the quarter including an operating margin of 42.6% a notable improvement over Q3’s 40.7% operating margin and a year prior’s 40.0% operating margin. BlackRock’s ability to increase assets and keep the operating margin high during the quarter is a true sign that their business model works. This sent BlackRock’s shares up 4.39% on the day.

The announced acquisition of Credit Suisse’s Swiss Re will improve BlackRock’s already dominate ETF market share in Europe, in particular the Swiss marketplace. BlackRock outbid rival State Street for the Credit Suisse’s ETF arm helping BlackRock maintain their territorial advantage in the region. This will be a key catalyst for ETF AUM in the quarters ahead.

Improved revenue and AUM inflows from every unit helped justify an increased price target for BlackRock. The previous price target of $232.00 was broken today with the earnings jump, however after readjusting the model a $253.25 price target will be assigned due to improved valuation. This represents an additional 9.1% upside from the current price. 

No comments: