BlackRock, the largest asset manager in the world, reported quarterly earnings and revenue that missed analysts’ expectations on Wednesday.
Here’s how the company did compared with what Wall Street expected:
- Earnings: $6.08 cents per share vs. $6.27 per share forecast by Refinitiv
- Revenue: $3.434 billion vs. $3.516 billion forecast by Refinitiv
The company’s assets under management totaled $5.98 trillion at the end of the quarter. The company board of directors approved a 5 percent increase in its quarterly cash dividend to $3.30.
“BlackRock is well positioned to deliver the holistic portfolio solutions, technology services and strategic counsel that clients increasingly are seeking, especially in the face of meaningful headwinds for the asset management industry,” CEO Larry Fink said in the earnings press release. “We will continue to invest in our platform to ensure BlackRock is even better positioned to serve clients and consistently deliver long-term value to shareholders in the years ahead.”
The stock is down 6.1 percent over the past three months and 27.8 percent over the past 12 months. The financial giant’s stock fell about 23 percent in 2018, underperforming the broader market. The S&P 500 fell 6.23 percent in 2018.
The company — led by CEO Larry Fink — will dismiss about 500 employees (about 3 percent of its global workforce) in the weeks ahead, according to an internal memo viewed by CNBC on Thursday. The cuts are part of a company-wide effort to “reallocate resources to our most critical growth opportunities,” Rob Kapito, BlackRock’s president, said in the memo.
“As our industry undergoes an era of significant change, we can continue to outperform by building our business in high-growth markets and using our advantages in technology and portfolio construction to lead change in the industry,” Kapito added. “But executing on this strategy requires that we move decisively to refocus resources where the impact will be greatest. It also requires that we operate as efficiently as possible and are organized for success. Sometimes this requires difficult decisions.”
Deutsche Bank downgraded BlackRock shares to hold from buy on Thursday and told clients not to expect much from asset manager stocks over the next year. Of the group, analyst Brian Bedell said he still prefers BlackRock to peers.
“Across these hold-rated companies, we continue to slightly prefer BlackRock given it is one of the few companies likely to sustain positive organic growth (though margins and EPS growth is likely to become more challenged given market conditions),” Bedell wrote.
The analyst sees BlackRock’s stock price inching higher to $405 over the next 12 months. That’s about a 2 percent climb from the current share price of $397.
This is breaking news. Please check back for updates.
—BlackRock CEO Larry Fink is scheduled to appear on CNBC’s “
Squawk Box”
Wednesday after the results are released.
—CNBC’s
Leslie Picker
contributed reporting.