BlackRock: Straddling Resilience and Repricing

We initiate on BLK with a Hold rating and $1082 PT. BlackRock, Inc. provides global asset management

services to clients ranging from pension plans and sovereign wealth funds to individuals, making it the world’s largest and most influential investment manager. Behind the mature industry veil, it has quietly built a business model that combines durable fee revenue with rising private-credit exposure in an enviable intersection of scale & innovation. This intersection is relevant now given the tension it creates between BlackRock’s above-consensus earnings outlook, which we see reaching $51.50 EPS in FY26 (driven by structurally rising fee rates and visible margin leverage), and the reality of a valuation environment buffeted by persistently elevated real rates and sticky inflation [macrosynergy.com]. The market focus on headline beats each quarter is changing the underlying multiple expansion calculus—today’s 24x PE is a full +27% above peer and historical median, a historic level that has predicted negative forward total returns in asset management. We value BlackRock on a blended 21x PE multiple on 2026 earnings, reflecting a premium to peers for its unrivaled organic growth (6%+ ongoing fee growth, leveraged to disciplined buybacks), while accounting for a margin of safety for a slower and more uneven path to Fed policy and the mechanical impact of a higher discount rate on equity multiples [fool.com.au; tradingeconomics.com]. Adaptations to alternatives and technology should defend revenues, but with $10T of AUM still tied to public markets, we cannot ignore downside macro scenarios. A bull case requires a faster