BlackRock's ‘bold, but doable' targets reflect a changing asset manager
From their Manhattan headquarters on Thursday, top BlackRock leaders—including Chief Executive Larry Fink, who had just flown back to New York after a trip to the Middle East—lined up to discuss their business with investors and analysts over five hours of presentations.
The goal: to show why they think BlackRock is a stock worth owning. They were gathered for the company's investor day, complete with 147 slides packed with fresh five-year financial targets for fund-raising, revenue, and more. The firm's last investor day was in 2023.
BlackRock has ambitious goals. Over the next five years, the company aims to roughly double its operating income to $15 billion, double its market capitalization to $280 billion, and increase revenue, which in 2024 totaled $20 billion, by 75% to $35 billion. It's targeting organic base fee growth of at least 5%, and an operating margin of at least 45%, 'through the market cycle."
Private markets will be a big part of BlackRock's growth. The world's largest money manager, with $11.6 trillion of assets, is now targeting $400 billion of private markets fund-raising by 2030 as it aims for technology and private markets businesses to contribute at least 30% of overall revenue by that year. That's up from a 15% slice in 2024.
'Bold, but doable ambitions," said Evercore ISI analyst Glenn Schorr.
BlackRock's fresh targets sets new stakes for the performance expected from the $28 billion of private markets acquisitions it's carried out in the past year. They paint a picture of an asset manager betting its future on private markets after making its name in the public markets with fixed income and exchange-traded funds.
'We're not reliant on any one strategy or asset class," said Martin Small, BlackRock's chief financial officer and head of corporate strategy, in prepared remarks. 'All of our businesses have delivered organic base fee growth over the last five years. That said, the BlackRock of the next five years, to 2030, is different than the past."
Trading at 24 times earnings, investors assign BlackRock's stock a lower multiple than shares of pure private markets players Blackstone and KKR, which trade at 42 times and 54 times earnings, respectively.
Investors could start to view BlackRock's stock as a play for exposure to assets such as private credit and infrastructure, not just its best-known products in the public markets like exchange-traded funds.
'Are we in direct competition with Blackstone? I would say, in their two core businesses, no. But in other areas of private [assets], where we have deemed we have an incredible opportunity, [yes]," Fink said in an interview with Barron's in March. He added at the time: 'I have no intention of going into private equity" with any large-scale acquisition. 'I have no intention of being huge in real estate."
For now, investors seemed underwhelmed by what they heard Thursday. Shares of BlackRock fell 0.4% while the S&P 500 rose 0.2%.
That slide is typical of the firm's investor days. In 2018, 2021, and 2023—the past three such events held by the firm—the stock fell 1.1%, 0.4%, and 0.5% before recovering those losses the following session, according to Dow Jones Market Data.
Write to Rebecca Ungarino at rebecca.ungarino@barrons.com
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