Citi Maintains 'Buy' Rating on BlackRock (BLK), Sees Higher Stock Price

May 14, 2008 9:42 AM EDT

Citi maintains a 'Buy' rating on BlackRock (NYSE: BLK). Price target $240.

Citi analyst says, "We see long-term opportunity coupled with near-term momentum that should drive strong earnings growth and a higher stock price at BlackRock. Our view is driven by our analysis that shows roughly 80% of the $1.36 trillion asset base is well-positioned for near-term organic growth. Additionally, BlackRock has several multi-billion dollar AUM growth opportunities including expanding European & US retail asset growth (which alone could add up to 10% incremental EPS growth), cross-selling to existing institutional clients, and broadening the firm's global platform, none of which are fully reflected in our current EPS estimates. Furthermore, we estimate that continued growth in alternatives and European retail equities (some of the fastest growing areas in the firm), could drive revenue yield expansion of up to 5bps over the next 3 years providing about 10% more upside to our out-year estimates. Finally, we believe the acquisition of the Merrill Lynch Investment Management business (MLIM), transforms the new BlackRock from an entity that was relatively insulated from the global economy (since it was largely fixed income oriented) to a franchise that can capitalize on global growth."

BlackRock, Inc. (BlackRock) operates as an investment management firm in the United States.

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