We initiate on BlackRock with a Buy rating and a $1,210 price target. Record inflows and private markets accretion are set to accelerate adjusted earnings to $65.20 per share in 2027, leaving the stock undervalued at 16.5 times forward earnings.
Key points
- $15.5 trillion in assets under management anchors BlackRock's scale, generating $205 billion of net inflows and 11% organic base fee growth in the third quarter of 2026.
- $65.20 in 2027 adjusted earnings per share represents a 14% compound growth rate from private credit integration and Aladdin technology subscriptions.
- 16.5 times forward earnings leaves BlackRock at a discount to historical multiples, creating an attractive entry point for high-margin fee compounding.
The call
At $1,073.79, BlackRock trades at 16.5 times 2027 adjusted earnings of $65.20. The current price requires annualized base fee growth to decelerate below 5% and operating margins to contract toward 43%. Over the past year, the shares lagged the market by 26 percentage points as investors digested merger dilution and acquisition charges.
Quarterly adjusted EPS and 2027 forecast ($)- Reported adjusted EPS ($)
- Analyst forecast ($)
Source: BlackRock SEC filings (Forms 10-K, 10-Q, 8-K) through Q3 2026; analyst forecasts for Q4 2026E through Q4 2027E.
We believe this pessimism is unwarranted. Organic base fee growth accelerated to 11% in the third quarter of 2026, driven by record ETF demand and private markets scaling. With HPS fully integrated and technology contract value growing 12%, adjusted operating margins should expand to 48%, propelling 2027 adjusted earnings to $65.20.
Share of base fees and securities lending by product (Q3 2026)- Equity51%
- Fixed income18%
- Private markets11%
- Multi-asset7%
- Cash management6%
- Liquid alts & other7%
Source: BlackRock earnings release furnished October 14, 2026. Data covers recurring investment fees.
Valuation
| Metric | 2027 estimate |
|---|
| Base fees and securities lending | $26.2 billion |
| Technology and subscription revenue | $2.65 billion |
| Adjusted operating margin | 48.0% |
| Adjusted diluted earnings per share | $65.20 |
| Target price-to-earnings multiple | 18.56 times |
| Twelve-month price target | $1,210.00 |
We apply an 18.56 times multiple to 2027 adjusted earnings of $65.20 to arrive at our $1,210.00 target. This valuation reflects a modest re-rating toward historical norms as acquisition integration costs subside and private debt fees compound. The 12.7% price appreciation plus a 2.1% dividend yield offers an asymmetric 14.8% total return that justifies our Buy rating.
Risks
- Market selloffs would compress assets under management and fees; watch equity index drawdowns.
- Higher borrowing costs could slow private market fundraising and debt deployment; watch quarterly capital commitments.
- Fee compression from low-cost index products could erode margins; watch the blended organic base fee rate.
What would change my mind
We would downgrade the stock if quarterly net organic base fee growth decelerates below 6% for two consecutive quarters.