Citi Analyst Sees Long-Term Growth Potential in BlackRock Despite Mixed Q2 Results, Highlights Lower G&A Expenses as Positive

Citi analyst Christopher Allen noted that BlackRock, Inc's BLK 2Q results were mixed (slightly lower than expected revenues and expenses), but the long-term outlook remains unchanged. 

BlackRock reported a Q2 revenue decline of 1% Y/Y to $4.46 billion, slightly below the consensus of $4.47 billion. Adjusted EPS rose 26% Y/Y to $9.28, beating the consensus of $8.46.

Lower G&A expenses (down 2.1% Y/Y) were the most significant positive for the quarter. Still, increased tech spending and seasonal impact in marketing are likely to drive a materially higher run rate in the second half. 

Allen forecasted 5.3% Y/Y growth in G&A (vs. management guide of mid to upper single digits). Flow dynamics were a bit mixed. 

Technology revenue ACV ticked up to 8% Y/Y, and management noted several large client integrations for Aladdin in 2Q. 

The analyst continues to like the story here, given BLK's positioning cyclically as one of the best ways to play a FICC rotation and the mix of structural opportunities the analyst sees (ETF opportunities in digital wealth/model portfolios, outsourced solutions). 

Morgan Stanley analyst Mike Cyprys maintained BlackRock with an Overweight and raised the price target from $881 to $888.

Price Action: BLK shares are trading higher by 0.53% at $731.76 on the last check Tuesday.