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MarketScreener Homepage  >  Equities  >  Nyse  >  BlackRock Inc    BLK

BLACKROCK INC

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BlackRock profit misses estimates, hit by lower fees for lending stocks

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07/19/2019 | 10:19am EDT
FILE PHOTO: Larry Fink, Chief Executive Officer of BlackRock, stands at the Bloomberg Global Business forum in New York

NEW YORK (Reuters) - BlackRock Inc, the world's largest asset manager, took in less cash last quarter as investors moved into lower-cost bond funds, and it made less money lending out stocks.

The company, manager of $6.8 trillion (£5.4 trillion) in assets, missed analysts' estimates for quarterly sales and profits on Friday, despite attracting $151 billion in new money, as much of that cash moved into lower-fee fixed income funds and accounts used to store cash.

The company's revenue for the three months through June 30 fell 2.2% to $3.52 billion from a year earlier, affected also by some fee cuts the company has made and lower fees for attaining performance targets.

"While lower fee rates is a headwind that will likely continue, we believe BlackRock is happy to accept modest pricing declines in order to take large amounts of market share," said Kyle Sanders, analyst at Edward Jones, which maintains its buy rating on BlackRock shares.

Lower demand to borrow stocks also hurt fees. The borrowers are typically hedge funds that want to "short" those shares, selling the stocks and hoping to buy them back later at a lower cost.

"I can't control that; that’s more environmental," said BlackRock Chief Executive Larry Fink in an interview.

Shortseller Andrew Left of Citron Capital said in a recent investment letter that, because of the market rally, "it has been an extraordinarily challenging environment to be a short seller." The benchmark S&P 500 overcame an escalation in the U.S.-China trade fight to close the first six months of this year up 17%, the best first-half performance for the index since 1997.

Investors did pour more money into BlackRock's actively managed funds aimed at beating the market over the low-fee passive-investment products. The company also reported 20% growth in its business unit that licenses software and other technology to other financial companies.

"The trend going into the second half is very positive," Fink said. "Things we can control ... were exceptional. It was probably one of our finest quarters in years of flows, in terms of engagement, and more importantly, when I talk about BlackRock, no organization has a combination of passive, active and technology."

Meanwhile, BlackRock said its iShares-branded ETFs took in $36.10 billion of new money, up from $30.69 billion in the preceding quarter.

Net income attributable to New York-based BlackRock fell to $1 billion, or $6.41 per share, from $1.07 billion, or $6.62 per share, a year earlier. The company cited expenses related to recent acquisitions and a higher effective tax rate. Total expenses rose nearly 4% to $2.25 billion. (https://bit.ly/2Ya6YZj)

Analysts had expected a profit of $6.50 per share, according to IBES data from Refinitiv.

Shares of the company were up slightly in early trading.

(Reporting by Trevor Hunnicutt in New York, C Nivedita and Bharath Manjesh in Bengaluru; Editing by Jennifer Ablan and Steve Orlofsky)

By Trevor Hunnicutt

Stocks mentioned in the article
ChangeLast1st jan.
BLACKROCK INC 2.48% 419.46 Delayed Quote.4.20%
DJ INDUSTRIAL 1.20% 25886.01 Delayed Quote.10.97%
NASDAQ 100 1.59% 7604.108768 Delayed Quote.20.13%
NASDAQ COMP. 1.67% 7895.993811 Delayed Quote.19.00%
S&P 500 1.44% 2888.68 Delayed Quote.13.59%
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Financials (USD)
Sales 2019 14 269 M
EBIT 2019 5 479 M
Net income 2019 4 311 M
Finance 2019 1 468 M
Yield 2019 3,17%
P/E ratio 2019 15,3x
P/E ratio 2020 13,7x
EV / Sales2019 4,55x
EV / Sales2020 4,17x
Capitalization 66 433 M
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Technical analysis trends BLACKROCK INC
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Mean consensus OUTPERFORM
Number of Analysts 18
Average target price 523,00  $
Last Close Price 419,46  $
Spread / Highest target 35,2%
Spread / Average Target 24,7%
Spread / Lowest Target 8,00%
EPS Revisions
Managers
NameTitle
Laurence Douglas Fink Chairman & Chief Executive Officer
Robert Steven Kapito President & Non-Independent Director
Robert L. Goldstein Chief Operating Officer & Senior Managing Director
Gary S. Shedlin Chief Financial Officer & Senior Managing Director
Derek N. Stein Global Head-Business Operations & Technology
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