BlackRock. International Investment Company

BlackRock, Inc. (BLK) is one of the largest international investment firms, providing investment and risk management services to institutional and retail clients. Offers a wide range of products, including iShares exchange-traded funds (ETFs), open-end and closed-end mutual funds and investment funds. The value of assets under management is estimated at $9.09 trillion.

Factors of

investment attractiveness 1. At the end of 2022, the company's revenue decreased by 7.7% due to a correction in the value of assets and the negative impact of currency fluctuations. This year, the expected growth of the indicator is estimated at 1.9% y/y, while in 2024 the pace is likely to accelerate to 8-10%. Overall, the company has demonstrated robust revenue growth of 5.6% over the past five years, maintaining an operating margin of 39%.

2. The main factor in the growth of BLK's business is diversification. In addition to traditional areas, the company provides technological services, which provides opportunities for inorganic growth. For example, due to the steady demand for BlackRock's own investment platform, Aladdin, the revenue of the technology segment grew by 6% over the past year, despite a decrease in investor activity.

3. Risk hedging instruments, including through the iShares ETF, support customer demand even in times of increased volatility. In addition, in the context of the stock market correction, the company benefited by providing access to fixed income instruments (bonds) and money market instruments. Due to this, at the end of last year, the company attracted new assets in the amount of $306 billion.

Amid the stress in the banking sector, BLK recorded a net inflow of $110.3 billion in new investor funds in the first quarter, 93% of which came from long-term investments. Over the past ten years, the organic growth of long-term assets under management has averaged about 5% per year, compared to the industry average of 2.5%. The trend towards the redistribution of funds from deposits to more profitable instruments may act as a factor in further asset inflows this year, as the company also offers cash management strategies.

5. BLK adheres to a policy of regular share buybacks, spending an average of $1.9 billion annually on buy back for the past five years. For 2023, the volume of the planned share buyback was estimated by management at $1.5 billion, while the recent increase in the quarterly dividend to $5 per share increased the dividend yield to 2.98% per annum.

Amid the stress in the banking sector and recession risks, BlackRock stock may be under pressure in the short term. At the same time, we remain positive about the company's long-term prospects, not only of organic growth as market conditions normalize, but also due to inorganic growth factors.

The target price for BLK stock on the horizon of the year is $741.