Goldman Sachs Reiterates Neutral Rating on The Blackstone Group (BX)

Goldman Sachs analyst Alexander Blostein reiterated a Neutral rating and $150.00 price target on The Blackstone Group (NYSE: BX)

The analyst comments "BX's roughly in-line 3Q24 results and management's forward commentary continue to support the firm's accelerating earnings growth amid a more constructive outlook for transactions, easing financial conditions, and a step up in management fees from the previously disclosed funds. Notably, 3Q results saw a 6% y/y management fee growth (breaking with the recent trend of <2% since 3Q23) as a number of fee holidays expired and BX remains on track to deliver further acceleration in management fee growth as additional funds activate. BX's strategic growth initiatives continue to deliver, but are partially offset by slower trends in Real Estate (~40% of firm-wide fees) which will likely take some more time to recover (though management suggested some hopeful signs in both BREIT and BPP). That said, this growth has been fairly well telegraphed and largely reflected in Consensus estimates. We expect these dynamics to bring BX management fee growth back above 10% in 2025/26 (following MSD growth in 2023/24), resulting in ~15% FRE growth y/y on average. On the PRE front, the firm sees near-term acceleration in capital velocity / realizations - most notably in Private Equity, while in Real Estate BX expects to remain a net buyer of assets over the near-term. Although we remain encouraged by BX's accelerating earnings trajectory, we continue to think the stock is ahead of itself. Notably, following today's move, BX is up ~30% YTD against slightly negative EPS revisions in both 2025 and 2026 EPS - pushing the stock's P/E (net of SBC) to 35X on 2025 and 30X on 2026 with overall P/E expansion +30% YTD. While this is not too outsized vs. the rest of the Alt's sector (both in terms of FRE revisions which have been closely correlated with relative stock performance and the absolute level of P/E expansion), this does leave BX at a significant valuation premium relative to its mid-teen FRE growth algo, in our view. Mainly, with the implied 2025 P/FRE (net of tax, net of SBC) multiple of >50X, BX's PEG is the highest in the group at over 3X, which we think is likely unsustainable. Our 2024/25/26E EPS estimates are relatively unchanged at $4.21/$5.36/$6.62 from prior of $4.17/$5.48/$6.56 - modestly below consensus."

For an analyst ratings summary and ratings history on The Blackstone Group click here. For more ratings news on The Blackstone Group click here.

Shares of The Blackstone Group closed at $169.73 yesterday.

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