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On Thursday, Barclays (LON:BARC) adjusted its outlook on Blackstone Group (NYSE:BX) shares, reducing the price target to $186 from the previous $192, while maintaining an Equalweight rating on the stock. Currently trading at $177.78, Blackstone has shown strong momentum with a 31.8% gain over the past six months. The revision follows Blackstone’s recent earnings report, which revealed a mix of outcomes for the investment firm.
According to Barclays, Blackstone’s earnings per share (EPS) surpassed expectations due to favorable fund-related performance revenue (FRPR) and higher-than-anticipated realizations. The company maintains impressive profitability with a 95.2% gross margin and has consistently paid dividends for 18 consecutive years. InvestingPro analysis reveals 13 analysts have revised their earnings upward for the upcoming period. The company also demonstrated robust activity in fundraising and deployment of capital. Such positive results, however, were counterbalanced by less impressive core management fees, assets under management (AUM), and fee-earning assets under management (FEAUM), all of which did not meet the analyst’s expectations.
The performance of Blackstone’s real estate investments remains under pressure, a trend that has persisted and contributed to the tempered outlook. Furthermore, projections for management fee growth through fiscal year 2025 seem to be slightly below initial expectations, a factor that influenced Barclays’ decision to adjust the price target downward. Based on InvestingPro’s comprehensive Fair Value analysis, Blackstone appears to be trading above its Fair Value. Investors seeking deeper insights can access over 12 additional ProTips and a detailed Pro Research Report, available exclusively with an InvestingPro subscription.
The analyst’s statement highlighted the mixed results, noting, "EPS beat on FRPR and realizations, and fundraising & deployment were strong, but core management fees, AUM, and FEAUM missed, real estate performance continues to be challenged, and FY25 management fee growth appears to be a bit below expectations, which is weighing on shares in today’s tape."
The changes in Blackstone’s financial metrics and the subsequent adjustment of the price target by Barclays reflect the complex dynamics at play within the company’s operations. Investors and market watchers will likely keep a close eye on Blackstone’s future performance, particularly in the areas where it has not met expectations.
In other recent news, Blackstone has been making significant strides. The company posted stronger-than-expected fourth quarter results, with earnings and revenue surpassing analyst estimates. The private equity giant reported distributable earnings of $1.69 per share, exceeding the consensus forecast of $1.43. Revenue soared 64% year-over-year to $4.15 billion, also outperforming expectations of $3.78 billion. In addition, Blackstone’s total assets under management rose 8% year-over-year to $1.13 trillion.
In addition to its impressive financial performance, Blackstone is reportedly negotiating to acquire a substantial stake in a 50-story office building in New York, according to a Bloomberg report. The current owners of the building are institutional investors guided by J.P. Morgan Global Alternatives and Fisher Brothers. This prospective acquisition follows recent comments made by the company’s executives suggesting that the commercial real estate sector is showing signs of stability.
These recent developments indicate a period of growth and expansion for Blackstone, with the firm exhibiting significant momentum as it continues to innovate and build market-leading businesses.
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