Last Update 25 Oct 25
Fair value Decreased 1.59%Blackstone's average analyst price target has been adjusted modestly lower, decreasing by approximately $3 to $178.79. Analysts cite factors such as margin pressure, shifting management fee expectations, and a mixed outlook for future results despite ongoing portfolio growth.
Analyst Commentary
Recent analyst commentary on Blackstone reveals a mixture of optimism regarding the company’s strategic position and caution over potential headwinds. The range of updated price targets and associated commentary helps illustrate these underlying views.
Bullish Takeaways- Bullish analysts are increasing price targets, citing expectations of a rebound in the capital markets. This is seen as supportive of valuation upside.
- The firm continues to attract solid fundraising, which signals ongoing investor confidence and positions Blackstone for long-term growth opportunities.
- Initiations with favorable ratings underscore a belief in Blackstone’s fundamental business strength and execution capabilities within the alternative asset management space.
- Some analysts highlight that Blackstone’s diversified platform and consistent portfolio growth remain attractive, even amid a shifting economic environment.
- Bearish analysts are cutting price targets in response to concerns over near-term margin compression and decelerating management fee growth.
- Recent quarters have elicited caution due to softer financial results, particularly with regard to fee-related earnings margins and muted realizations forecasted in upcoming periods.
- There is apprehension around low investing activity and mixed asset returns, which could weigh on Blackstone’s performance over the short term.
- Downward movement in stock price following earnings, despite seemingly solid results, has been linked to tempered expectations for future quarters.
What's in the News
- Blackstone and TPG are in advanced discussions to acquire medical device maker Hologic, with a potential deal value exceeding $17 billion. Negotiations are ongoing and no final agreement has been reached (Bloomberg).
- Blackstone is set to invest $706 million to become the largest shareholder in India's Federal Bank, acquiring a 9.99% stake (Bloomberg).
- SL Green Realty has agreed to purchase a Midtown Manhattan office building from Blackstone for $730 million, highlighting continued optimism in the New York City office market (Wall Street Journal).
- Blackstone is exploring a bid for Big Yellow Group, the UK self-storage operator. This is at a preliminary stage with no bid submitted yet (Bloomberg).
- Blackstone is among the suitors considering offers for Optum's UK health services unit, alongside other private equity interests (Sky News).
Valuation Changes
- Consensus Analyst Price Target: Decreased modestly from $181.68 to $178.79, reflecting a slightly tempered outlook.
- Discount Rate: Edged down marginally from 8.20% to 8.19%.
- Revenue Growth: Increased from 16.73% to 19.70%, which indicates improved growth projections.
- Net Profit Margin: Declined slightly from 48.85% to 48.30%.
- Future P/E: Dropped significantly from 28.56x to 17.69x. This suggests a lower forward valuation multiple.
Key Takeaways
- Blackstone is positioned for strong future growth with high inflows and substantial capital for opportunistic investments in undervalued assets.
- Strategic alliances and innovations in private credit and wealth management aim to boost revenue through expanded market reach and larger spreads.
- Economic and geopolitical uncertainties, including tariffs and trade negotiations, pose risks to Blackstone's revenues, real estate values, earnings, and overall financial performance.
Catalysts
About Blackstone- An alternative asset management firm specializing in private equity, real estate, hedge fund solutions, credit, secondary funds of funds, public debt and equity and multi-asset class strategies.
- Blackstone has raised $62 billion of inflows in Q1 2025, marking the highest level in three years, which boosts assets under management (AUM) and gives the company a strong foundation for future revenue growth.
- The firm is well-positioned to benefit from market dislocation with $177 billion of dry powder available for opportunistic investments, potentially increasing future earnings as capital is deployed in undervalued assets.
- Blackstone's strategic alliance with Wellington and Vanguard aims to develop integrated public-private investment solutions, potentially expanding revenue channels by tapping into the private wealth market.
- The expansion in private credit, particularly in investment-grade private credit, shows a 35% year-over-year growth, indicating potential for significant revenue streams due to larger spreads and structural tailwinds in the credit markets.
- The innovation in private wealth management and strong fundraising results in this channel ($11 billion in the first quarter of 2025) suggest potential for margin expansion and revenue growth by further penetrating individual investor markets.
Blackstone Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Blackstone's revenue will grow by 16.7% annually over the next 3 years.
- Analysts assume that profit margins will increase from 21.2% today to 48.9% in 3 years time.
- Analysts expect earnings to reach $10.5 billion (and earnings per share of $8.25) by about September 2028, up from $2.9 billion today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 28.6x on those 2028 earnings, down from 47.3x today. This future PE is greater than the current PE for the US Capital Markets industry at 26.7x.
- Analysts expect the number of shares outstanding to grow by 1.91% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 8.2%, as per the Simply Wall St company report.
Blackstone Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Tariffs and ongoing multilateral trade negotiations introduce significant uncertainty that could impact economic growth and inflation, influencing investor sentiment and potentially affecting Blackstone's future revenues.
- Potential increases in construction costs due to tariffs may reduce new supply in real estate, affecting Blackstone's real estate portfolio values and consequently impacting revenue and net margins.
- Market volatility and geopolitical concerns could reduce the near-term realization activity, affecting Blackstone’s distribution of earnings and net margins from asset sales.
- The high level of market uncertainty may delay investment deployment, diminishing the opportunity for immediate capital gains, and potentially affecting earnings growth.
- The economic slowdown risk due to delayed tariff diplomacy could negatively affect a broader range of companies in Blackstone's portfolio, potentially impacting asset valuations and overall financial performance.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $181.684 for Blackstone based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $215.0, and the most bearish reporting a price target of just $150.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $21.5 billion, earnings will come to $10.5 billion, and it would be trading on a PE ratio of 28.6x, assuming you use a discount rate of 8.2%.
- Given the current share price of $173.17, the analyst price target of $181.68 is 4.7% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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