We’re sticking with BlackRock after it delivered solid earnings in a tough market

BlackRock’s first-quarter earnings on Friday reaffirmed our investment in the stock, despite a choppy operating environment out of the asset management giant’s control. Revenue in the first quarter rose 11.6% year over year to $5.28 billion, missing the $5.34 billion estimate, according to LSEG. Adjusted earnings per share (EPS) of $11.30 topped expectations of $10.14, LSEG data showed. Assets under management (AUM) totaled $11.58 trillion at the end of the quarter, below the consensus estimate of $11.7 trillion, according to FactSet. BlackRock’s report landed at a rocky time in the stock market, which challenges its core business in a few ways. Buoyant financial markets help attract more inflows into BlackRock’s investment funds, expanding the pool of assets it collects management fees on. And with BlackRock collecting fees as a percentage of assets under management, it’s better when those assets are going up in value. The difficult year for U.S. stocks — the S & P 500 entered Friday down 10.4% so far in 2025 — has countered both of those dynamics. That showed up in Friday’s results with AUM and quarterly net inflows of $84.2 billion falling short of expectations (though there was some noise around flows that we’ll unpack later). That’s been reflected in the performance of BlackRock’s shares, which are down 16.2% year to date through Thursday. The stock is up nearly 1% in Friday’s session, modestly outperforming the S & P 500, which is slightly lower. Bottom line The iShares funds owner reported a solid quarter against a backdrop of lower expectations. Some highlights in the numbers include 6% organic fee growth, exceeding its 5% target, and better-than-expected adjusted operating margin of 43.2%. We also liked to see the nearly 16% increase in technology services revenue, primarily driven by its Aladdin data platform used widely across the investment industry. That unit is considerably smaller than its fee business, but strategically, technology is a key cog in the BlackRock machine. The company also saw $7 billion in net inflows for its budding private markets business. “This stock is not doing anything today. It should be acting much better” if not for the broader market being so downbeat, Jim Cramer said on Friday’s Morning Meeting . While net inflows in the quarter were weaker than the $129 billion expected, executives said the figure was hurt by “low-fee institutional index outflows” due to rebalancing. Without that, net inflows in the January-to-March period would’ve been $140 billion — a much more respectable figure in these market conditions, even if it’s down from $281 billion in the fourth quarter. As for the client outflows specifically, we’re not concerned because they involve the low-fee index business. BlackRock’s active strategy funds earn higher fees, which is not in question here. “In a period of time where most people lost assets in equities, we had equity increases,” CEO Larry Fink told Jim during an interview on CNBC. Meanwhile, the magnitude of BlackRock’s earnings-per-share beat was helped by a lower tax rate, but analysts at TD Cowen said in a note to clients Friday that when normalizing the result, “core” EPS still was ahead of their estimates. The small miss on quarterly revenues is not a problem, given the macro landscape. BlackRock’s first-quarter results suggest the company is controlling what it can control. With the stock already trading at depressed levels, we’re reiterating our buy-equivalent 1 rating. Our price target is currently under review as we take into account the elevated uncertainty and lower multiples across the market. BlackRock (BLK) Why we own it: BlackRock is a premier asset gatherer perhaps best known for its family of iShares exchange-traded funds. However, the firm is wisely pushing into alternative strategies, such as infrastructure and private credit, with a series of acquisitions to fuel its next leg of growth. Led by venerable CEO Larry Fink, BlackRock has a track record of sustained asset and technology services growth while remaining disciplined on expenses to boost profitability. Initiation date: Oct. 16, 2024 Most recent buy: March 4, 2025 Competitors: State Street , Vanguard, Apollo Global Management and Ares Management Commentary Private markets were, unsurprisingly, a big focus on the call. Friday’s report marked the first since BlackRock completed its acquisition of Preqin, a leading provider of data on private markets. It’s an essential part of the company’s aggressive push into private markets — basically, assets that don’t trade on public exchanges, which includes loans to companies, known as private credit, and investments into infrastructure projects such as data centers and ports. With Preqin, Fink has said he hopes to create more transparency and liquidity in private markets and eventually get to a place where BlackRock offers funds consisting of private markets assets to investors, including in retirement accounts for retail investors. “This is one of the main reasons why we bought Preqin and why I believe Preqin will become a major component for the whole ecosystem,” Fink said on Friday’s call. Preqin is complementary to the Aladdin platform. BlackRock in October finalized its purchase of investment firm Global Infrastructure Partners, or GIP. It is still in the process of closing a deal for HPS Investment Partners, a private credit provider, later this year. Due to geopolitics, more uncertainty shrouds a BlackRock-led deal to buy 43 ports — including two critical ones on the Panama Canal — currently owned by Hong Hong-based CK Hutchinson. Fink did not address directly the obstacles to closing the transaction, but maintained a positive tone about why owning the ports is good for BlackRock and other investors in the deal. Fink said the infrastructure theme is alive and well, despite growing concerns about global trade and the economy. “The big macro trends that were in place 80 days ago actually are still around,” Fink said, pointing to the construction of data centers to support artificial intelligence, as well as the need to upgrade power grids and build more chip plants. BlackRock is investing in data centers as part of a consortium that also includes Nvidia and Microsoft, fellow Club holdings. Fink said that initiative was only possible for both GIP and BlackRock due to the acquisition. In fact, Fink argued the volatility in public markets over the past few months adds to the attractiveness of private markets. “We’re seeing how sensitive public markets are to uncertainty and how quickly they can move in reaction to policy proposals,” he said. “These dynamics to drive even more capital flows into private markets as investors look to insulate portfolios from tariff impacts and seek attractive income and growth.” (Jim Cramer’s Charitable Trust is long BLK. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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Samara Cohen, Chief Investment Officer of ETF and Index Investments at Blackrock, (C) rings the opening bell as Bitcoin Spot ETF’s are launched on the Nasdaq Exchange on January 11, 2024 in New York City.

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BlackRock’s first-quarter earnings on Friday reaffirmed our investment in the stock, despite a choppy operating environment out of the asset management giant’s control.