Rise in AUM, GIP Buyout Likely to Support BlackRock's Q4 Earnings

Core Viewpoint - BlackRock is expected to report improved fourth-quarter and full-year 2024 results, with year-over-year increases in revenues and earnings anticipated [1]. Group 1: Earnings Performance - BlackRock's third-quarter 2024 earnings exceeded the Zacks Consensus Estimate, driven by increased revenues and non-operating income, despite higher expenses [2]. - The company has a strong earnings surprise history, surpassing the Zacks Consensus Estimate in each of the last four quarters, with an average surprise of 6.86% [3][4]. Group 2: Assets Under Management (AUM) - BlackRock's AUM reached $11.5 trillion, supported by net inflows and market appreciation, with a year-over-year increase of 18.5% expected [2][7]. - The approval of spot Bitcoin and ether ETFs has contributed to AUM growth, with the iShares Bitcoin Trust surpassing $50 billion in assets within 11 months of its launch [5][6]. Group 3: Revenue Components - Investment advisory and administration fees are projected to rise, with the consensus estimate for these revenues at $4.39 billion, indicating a 21.8% year-over-year increase [8]. - The consensus estimate for investment advisory performance fees is $383 million, reflecting a growth of 23.2% [8]. - Management fees from the recent acquisition of Global Infrastructure Partners are expected to add nearly $250 million in the fourth quarter [9]. Group 4: Expenses - BlackRock's total expenses are anticipated to increase to $3.39 billion, representing an 11.2% year-over-year rise, driven by restructuring initiatives and inorganic expansion efforts [11][12]. Group 5: Major Developments - In December, BlackRock announced an agreement to acquire HPS Investment Partners for $12 billion, marking a significant move into the private credit market [13]. - The acquisition is expected to close in mid-2025 and is projected to add approximately $850 million in base fees and nearly $360 million in post-tax fee-related earnings [15]. Group 6: Earnings Estimates - The Zacks Consensus Estimate for BlackRock's fourth-quarter earnings is $11.44, reflecting an 18.4% increase from the previous year, while sales are estimated at $5.58 billion, indicating a 20.5% rise [17].