Last Update 29 Jun 26
Fair value Decreased 12%BX: AI Data Center Buildout Will Drive Future Earnings Resilience
The updated analyst price target for Blackstone has shifted from about $162 to $143, reflecting a recalibration that balances softer earnings quality and trimmed estimates across several firms with ongoing support from BREIT fee-related revenue and recent target increases by some banks.
Analyst Commentary
Recent research on Blackstone points to a mixed but constructive tone, with analysts weighing the quality of current earnings against fee-related growth drivers such as BREIT.
Bullish Takeaways
- Bullish analysts highlight BREIT's reported 0.9% return in May as a positive signal for Blackstone's fee-related performance revenue in Q2, which they see as a key support for the stock's earnings profile.
- Some bullish analysts view the BREIT update as reducing perceived contagion risk from related credit vehicles, which they see as helpful for investor confidence in Blackstone's broader platform.
- Several research updates reference raised price targets around periods of market dislocation in Blackstone shares, suggesting optimism that the stock can better reflect the firm's long-term earnings power over time.
- Upgrades and target hikes from certain firms indicate a view that Blackstone's scale and diversified fee streams provide a base for future execution, even as individual segment trends vary.
Bearish Takeaways
- Bearish analysts have repeatedly trimmed price targets following Q1 results and subsequent reviews, pointing to what they describe as low current earnings quality, even as longer term earnings power is acknowledged.
- Multiple target reductions from large banks such as JPMorgan and Morgan Stanley reflect caution around near term assumptions, with a focus on how macro and fundraising headwinds could affect Blackstone's realized performance fees.
- Several firms across the Street have cut targets by single and double digit dollar amounts, which signals concern about valuation support if fee-related revenue or realizations do not keep pace with prior expectations.
- Bearish analysts are also sensitive to the balance between growing fee-based assets and the timing of monetizations, which they see as crucial for Blackstone to convert its platform scale into consistent, high quality earnings.
What’s in the News for Blackstone
- A group of private credit lenders led by Blackstone, Apollo and FS KKR Capital Corp. is taking control of software company Medallia from Thoma Bravo in a recapitalization that reduces Medallia's debt and adds US$150 million of new capital to the business. (Source: Medallia recapitalization coverage)
- Funds affiliated with Blackstone Real Estate have agreed to buy the 821 room Hyatt Regency San Francisco from Sunstone Hotel, with closing expected in late July or early August, alongside the launch of Blackstone Credit & Insurance's SablePointe Credit Strategies platform focused on asset based lending. (Source: Sunstone announcement)
- Blackstone has launched SablePointe Credit Strategies under its Credit & Insurance division to focus on asset based lending and specialty credit, appointed James Garlick as President, hired Carey S. Roberts as Senior Managing Director and General Counsel for real estate, and highlighted plans for US$30b of AI focused data center investment in Japan plus participation in the Medallia recapitalization. (Source: SablePointe and corporate update coverage)
- Blackstone plans to invest US$30b in AI data centers in Japan over the next three to five years. This announcement coincided with a share price move, while broader US equity markets were mixed and crude oil prices and government bond yields fell. (Source: US equity market wrap)
- Senator Elizabeth Warren has requested information from Blackstone on data center transactions, asking about ownership overlaps with utilities and potential energy related regulatory risks. This came alongside a proposal that financial institutions disclose their exposure to AI related sectors, including data centers. (Source: Senator Warren inquiry coverage)
Valuation Changes for Blackstone
- Fair Value: modelled fair value has been reduced from $162.26 to $143.45, a decline of about 11.6%.
- Discount Rate: the discount rate has edged lower from 8.01% to 7.94%, a small reduction in the required return used in the valuation.
- Revenue Growth: the assumed long term revenue growth rate has increased from 14.07% to 16.11%.
- Profit Margin: the projected net profit margin has been cut from 50.50% to 43.28%, a sizeable reduction of roughly 7.2 percentage points.
- Future P/E: the future P/E multiple has been adjusted from 15.62x to 14.69x, indicating a slightly lower valuation multiple being applied to Blackstone's projected earnings.
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Key Takeaways
- Blackstone is positioned for strong future growth with high inflows and substantial capital for opportunistic investments in undervalued assets.
- Strategic alliances and innovations in private credit and wealth management aim to boost revenue through expanded market reach and larger spreads.
- Economic and geopolitical uncertainties, including tariffs and trade negotiations, pose risks to Blackstone's revenues, real estate values, earnings, and overall financial performance.
Catalysts
About Blackstone- An alternative asset management firm specializing in private equity, real estate, hedge fund solutions, credit, secondary funds of funds, public debt and equity and multi-asset class strategies.
- Blackstone has raised $62 billion of inflows in Q1 2025, marking the highest level in three years, which boosts assets under management (AUM) and gives the company a strong foundation for future revenue growth.
- The firm is well-positioned to benefit from market dislocation with $177 billion of dry powder available for opportunistic investments, potentially increasing future earnings as capital is deployed in undervalued assets.
- Blackstone's strategic alliance with Wellington and Vanguard aims to develop integrated public-private investment solutions, potentially expanding revenue channels by tapping into the private wealth market.
- The expansion in private credit, particularly in investment-grade private credit, shows a 35% year-over-year growth, indicating potential for significant revenue streams due to larger spreads and structural tailwinds in the credit markets.
- The innovation in private wealth management and strong fundraising results in this channel ($11 billion in the first quarter of 2025) suggest potential for margin expansion and revenue growth by further penetrating individual investor markets.
Blackstone Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?
- Analysts are assuming Blackstone's revenue will grow by 16.1% annually over the next 3 years.
- Analysts assume that profit margins will increase from 21.2% today to 43.3% in 3 years time.
- Analysts expect earnings to reach $9.8 billion (and earnings per share of $7.89) by about June 2029, up from $3.1 billion today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as $12.2 billion.
- In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 14.7x on those 2029 earnings, down from 29.7x today. This future PE is lower than the current PE for the US Capital Markets industry at 39.6x.
- Analysts expect the number of shares outstanding to grow by 0.37% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 7.94%, as per the Simply Wall St company report.
Risks
What could happen that would invalidate this narrative?- Tariffs and ongoing multilateral trade negotiations introduce significant uncertainty that could impact economic growth and inflation, influencing investor sentiment and potentially affecting Blackstone's future revenues.
- Potential increases in construction costs due to tariffs may reduce new supply in real estate, affecting Blackstone's real estate portfolio values and consequently impacting revenue and net margins.
- Market volatility and geopolitical concerns could reduce the near-term realization activity, affecting Blackstone’s distribution of earnings and net margins from asset sales.
- The high level of market uncertainty may delay investment deployment, diminishing the opportunity for immediate capital gains, and potentially affecting earnings growth.
- The economic slowdown risk due to delayed tariff diplomacy could negatively affect a broader range of companies in Blackstone's portfolio, potentially impacting asset valuations and overall financial performance.
Valuation
How have all the factors above been brought together to estimate a fair value?
- The analysts have a consensus price target of $143.45 for Blackstone based on their expectations of its future earnings growth, profit margins and other risk factors.
- However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $190.0, and the most bearish reporting a price target of just $116.0.
- In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be $22.5 billion, earnings will come to $9.8 billion, and it would be trading on a PE ratio of 14.7x, assuming you use a discount rate of 7.9%.
- Given the current share price of $115.4, the analyst price target of $143.45 is 19.6% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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