The first quarter of 2023 was shaped to be unique due to the challenging economic landscape that businesses have had to operate in over the past 12 months, characterized largely by record high inflation and as a result an environment of rising interest rates. As such, first-quarter earnings peaked with more investor interest than usual. BlackRock (NYSE: BLK) will be one of the companies scheduled to report earnings on April 14, 2023 at the opening bell.
introduction
BlackRock, Inc. It is a leading global investment management company, founded in America in 1988 and headquartered in New York. The company has become the world’s largest asset manager, with $8.6 trillion in assets under management, and provides a wide range of investment and technology services to institutional and retail clients around the world.
The company’s investment products span across various asset classes, including equities, fixed income, alternatives and cash management. In this report, we’ll analyze BlackRock’s financial performance for the first quarter of the year, focusing on key metrics such as revenue, earnings, and forecasts. In addition, we will provide insights into the company’s strategic initiatives and future outlook.
expectations
BlackRock is set to fall slightly below market expectations for the fourth consecutive quarter when it reports earnings and revenue, and this drop in growth is mainly driven by factors such as the current inflation-themed economic landscape, which has led to hawkish monetary policy responses from global central banks in the past. It constituted the fastest rate-raising cycle in 40 years, which had the net effect of causing major turmoil in the banking sector and financial markets.
As a result, this unique sequence of events, first instigated by the Covid-19 pandemic and then subsequent geopolitical tensions, has severely affected the advisory and investment management side of BlackRock.
Source: https://www.trefis.com/data/companies/BLK/no-login-required/TttoYqly/BlackRock-BLK-Earnings-Preview-BLK-Stock-Likely-To-Trade-Higher-Due-To- strong-fiscal-year-2023-first-quarter-results-with-revenue-and-earnings-beating-forecasts
As the global economy has seen many unprecedented events in the past 12 months, the company’s first-quarter earnings are likely to reflect the damage caused by wildly volatile commodity prices and the war in Ukraine, as well as the recent banking crisis. These cumulative factors affected the investment advisory and management fee side of the company, which account for three-quarters of total revenue and add up to an 11% loss from the prior year.
Key ideas to consider:
- BlackRock expects higher returns in the near term, driven by expectations that central banks will end the rate hike cycle, due to cracks that are starting to show in the real world economy, as well as inflation data that is starting to show signs of a downward trend.
- BlackRock is placing more emphasis and interest on “ultra-short-term” government bonds for income during this transitional period in the global economy. In addition, investment preference in emerging markets over developed economies will be seized.
- Among bearish data like lower revenue and earnings per share, the silver lining in the first quarter will be activity in BlackRock’s asset management and ETFs division. This comes on the back of the company leading the industry in 2022 with net inflows totaling $393 billion.
Earnings per share
The company’s earnings per share is expected to be lower, at $7.89 according to Trefis analysis, which is slightly higher than the consensus estimate of $7.72, and represents a decline of 17% from the number reported in the prior year. The revised estimate for first-quarter sales came in at $4.24 billion, which was a decrease of 9.9% from the year-earlier quarter.
BlackRock is valued at about $750 a share, which is 12% more than the current market price. However, the company is more likely to report an annual GAAP of $33.50 for a full year.
Technical Analysis (H4)
In terms of market structure, the price is close to key $620 level and find support. The current price action appears to have invalidated the upper trend line, but did so in a corrective manner, failing to break above the previous lower high. From now on, the current range between $637 – $676 The area is important because it could develop into a classic bull flag continuation pattern to the upside, or this area could form a bearish continuation pattern likely looking to test the previous low around $620 level.
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Ofentse Waisi
Market analyst
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