On Tuesday, Jefferies, a global investment banking firm, adjusted its outlook for The Blackstone Group (NYSE:BX), raising the stock's price target to $168 from $147. The firm sustained its Buy rating on the asset management company's shares. The adjustment follows Blackstone's intra-quarter monetization update, which revealed approximately $300 million in earnings, a figure 40% below previous estimates.
The update, which included a split of 85/15 across gross carried interest and realized investment income, contrasted with the prior estimate of $682 million. Despite the lower than anticipated monetization activity leading to a decrease in the third-quarter distributable earnings per share estimate to $0.90 from $1.05, Jefferies maintained its forecast for Blackstone's fee-related earnings at $1.2 billion.
The investment firm also noted a slight increase in Blackstone's fee-related earnings margin to 57.7% for the third quarter, up from 56.8% in the previous quarter. This adjustment aligns with management's commentary on maintaining margin stability. Within Blackstone's retail segment, the Blackstone Private Equity (BXPE) fund reported an August year-to-date performance of approximately 8%, attracting $1.1 billion in new capital, which, although lower than the $1.6 billion influx in the second quarter, totals $5.5 billion since the fund's inception.
Additionally, Blackstone's real estate debt strategy fund, BCRED, saw gross inflows of $3 billion, slightly down from $3.4 billion in the second quarter. The Blackstone Real Estate Income Trust (BREIT) reported an August year-to-date performance of 2.3%, which is below the approximate 4.5% hurdle rate.
In other recent news, Blackstone has been involved in multiple significant developments. The company confirmed plans to invest approximately $13.32 billion in the development of an artificial intelligence data center in northeast England. This investment is expected to boost the United Kingdom's position in the technology sector, particularly in the realm of artificial intelligence.
In addition, Blackstone, along with Vista Equity Partners, has agreed to acquire Smartsheet (NYSE:SMAR), a global collaboration software company, for a total of $8.4 billion. This acquisition marks a significant consolidation in the software industry and highlights the value seen in productivity-enhancing tools.
Furthermore, Blackstone has begun raising its third Asia-focused private equity fund, targeting at least $10 billion. This fund will primarily concentrate on investments in India, with significant markets such as Japan and Australia also being considered.
In analyst news, TD Cowen has maintained a Hold rating on Blackstone shares after the company released its intra-quarter realization update. The update indicated that third-quarter distributable earnings could range between $0.90 to $0.95 per share, falling short of the $1.10 consensus.
Finally, French President Emmanuel Macron recently met with top U.S. financiers, including Blackstone CEO Stephen Schwarzman, to discuss France's fiscal situation and potential tax increases. Despite fiscal concerns, Macron promoted France as an attractive investment destination and discussed expanding business opportunities.
InvestingPro Insights
To complement Jefferies' analysis of Blackstone Group (NYSE:BX), recent data from InvestingPro offers additional context to the company's financial position and market performance. Despite the lower-than-expected monetization activity noted in the article, InvestingPro data shows that Blackstone's revenue growth over the last twelve months as of Q2 2024 stands at an impressive 48.12%. This robust growth aligns with the InvestingPro Tip suggesting that net income is expected to grow this year.
Furthermore, while Jefferies raised its price target, it's worth noting that Blackstone's stock has already demonstrated strong performance, with a 24.15% price total return over the past three months. This aligns with another InvestingPro Tip highlighting Blackstone's strong return over the last three months.
For investors considering Blackstone's valuation in light of Jefferies' updated price target, it's important to note that the company is trading at a P/E ratio of 53.96. This relatively high earnings multiple is balanced by a PEG ratio of 0.83, suggesting the stock might be undervalued relative to its growth prospects.
InvestingPro offers 11 additional tips for Blackstone, providing a more comprehensive analysis for investors looking to delve deeper into the company's prospects.
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