BX: Mixed Fee Momentum And Deals Will Shape Future Performance Outlook

Analysts have raised their price target on Blackstone to about $164, up from roughly $125, citing expectations for faster revenue growth, stronger profit margins, and a more attractive future earnings multiple, despite mixed short term views on fee momentum and fundraising.

Analyst Commentary

Recent Street research presents a mixed picture, with some firms lifting long term valuation targets on expectations for a healthier capital markets backdrop, while others trim their outlooks in response to nearer term margin and fee growth pressures. Overall, the revisions suggest that, even as sentiment improves around Blackstone's structural growth opportunity, execution risks and the timing of a sustained earnings acceleration remain in focus.

Bearish analysts have modestly reduced their price targets, emphasizing that the stock's rally may already discount a significant portion of the expected recovery in fundraising and realizations. They are increasingly sensitive to forward guidance on fee related earnings, margin trends, and the pace of deployment, arguing that any disappointment versus high expectations could weigh on the multiple.

Bearish Takeaways

• Bearish analysts highlight softer projected fee related earnings margins into 2025, cautioning that higher compensation and operating costs may limit operating leverage and justify a more conservative valuation multiple.
• Several notes point to a prospective deceleration in management fee growth, warning that slower net inflows or delayed capital formation could challenge current growth assumptions embedded in the stock.
• Preview commentary ahead of upcoming results flags expectations for low investing activity, mixed investment performance, and muted realizations, which could cap near term distributable earnings and pressure premium valuation levels.
• Despite recognizing solid recent performance, cautious voices contend that downside risk remains if credit or macro conditions deteriorate, potentially delaying a full rebound in capital markets and extending the timeline for Blackstone to deliver on higher growth targets.

What's in the News

• Blackstone is nearing a more than $4B acquisition of utility parts maker MacLean Power Systems, having reportedly outbid industrial giant ABB, with an announcement possible as soon as next week (Bloomberg).
• The firm is in advanced talks, alongside TPG, to acquire medical device maker Hologic in a take private deal that could exceed $16B in enterprise value, with terms agreed and financing lined up but final signing still pending (Bloomberg/FT).
• Blackstone is close to a roughly $130M purchase of the Four Seasons hotel in downtown San Francisco, which signals renewed confidence in a hospitality market that has been under pressure in recent years (WSJ).
• Blackstone plans to liquidate a $1.8B senior housing portfolio at a loss exceeding $600M, which highlights the challenges it has faced in that real estate segment (WSJ).
• Kathleen McCarthy Baldwin, global co head of real estate, will depart Blackstone at year end, which will leave Nadeem Meghji as sole head of a unit that manages about $320B of the firm’s $1.2T in AUM (WSJ).

Valuation Changes

• The fair value estimate has risen significantly to approximately $164 from about $125, reflecting a more constructive long term outlook.
• The discount rate has increased slightly to about 8.3 percent from roughly 7.8 percent, indicating a modestly higher required return on equity.
• The revenue growth assumption has risen modestly to around 18.3 percent from roughly 15.9 percent, signaling higher expectations for top line expansion.
• The net profit margin forecast has increased to about 57.1 percent from roughly 53.1 percent, implying stronger anticipated operating efficiency and profitability.
• The future P/E multiple has fallen meaningfully to roughly 14.3 times from about 22.8 times, suggesting a more conservative valuation framework despite improved fundamentals.