New Assets, Equities Could Be Key for BlackRock and Peers in 2018
Peer performance in 4Q17
Asset managers (XLF) have had a great run in 2016 and so far in 2017, helped by rising broad markets (SPY), strong fundamentals driving savings and investments, and lower unemployment rates. The expectations in terms of performance and other income are rather low in the upcoming quarters, largely due to high valuations of equities, back-to-back rate hike expectations, and slowing investments in equities.
Among industry leaders, BlackRock (BLK) is expected to post sequential as well as year-over-year growth, with expected EPS (earnings per share) of $5.95 in 4Q17 and $5.82 in 1Q18, compared with $5.14 in each of the prior year’s quarters. The rebound in flows toward equities and continued flows in debt offerings are expected to drive growth. The company is expected to post revenues of $3.3 billion in 4Q17, a 14.1% rise year-over-year.
Interested in XLF? Don't miss the next report.
Receive e-mail alerts for new research on XLF
Mutual funds, active managers
Among BlackRock’s peers, The Bank of New York Mellon (BK) is expected to post EPS of $0.90 compared to $0.77 in the prior year’s period. It’s expected to see a sequential fall in EPS by $0.04, mainly due to higher profit booking or withdrawals from equities compared to fresh investments. The bank is expected to see revenue of ~$4 billion in 4Q17, a rise of 5.5%, helped by higher rates, resulting in higher net interest income.
T. Rowe Price (TROW) is expected to see a sequential as well as year-over-year fall in EPS to $1.44 in 4Q17, compared to $1.50 in the prior year’s quarter. The fall is expected to be largely due to a decline in operating margins and lower fees. Its revenues are expected to rise 14.5% and 12.3% in 4Q17 and 1Q18, respectively.
State Street (STT) is expected to post EPS of $1.69 and $1.46 in 4Q17 and 1Q18, respectively. The company has garnered high flows toward ETF offerings compared to other offerings, including administration.