Bank of America says this asset management giant is ‘best-positioned’ to capitalize on rising Treasury yields
Against a tough macro backdrop, Bank of America thinks BlackRock can outperform. The bank reiterated a buy rating on “best-positioned” BlackRock. It did lower its price target to $858 from $921 on the stock, but the new forecast implies more than 37% upside from Tuesday’s close. BlackRock stock has slumped nearly 12% in 2023. BLK YTD mountain BlackRock stock. But analyst Craig Siegenthaler forecasts as much as $60 billion to $70 billion in long-term net flows in the third quarter of 2023, which he says will only grow further thanks to gains in the company’s iShares ETF business and additions to money market funds as Treasury yields rise. “We expect reacceleration in LT net flows in 4Q23 and for BLK’s annualized organic growth rate to be between +4% and 5% in 2023 (vs. +4% in 2022) and +6% in 2024,” Siegenthaler said. “This view is supported by BLK’s industry-leading bond ETF business as we look for passive to win 60-70% of the fixed income rebalancing wave in 2024 after the Fed pause.” The firm also noted that BlackRock’s iShares ETF segment alone was responsible for more than $32 billion of net inflows in September, while commodities shed $2 billion in the same time period. Fixed income added $16 billion while equities gained $18 billion, BofA said. Treasury yields have soared in recent days , with the 10-year climbing to its highest level in 16 years, rattling equity markets. The yields on 30-year Treasury bonds, meanwhile, briefly traded above 5% on Wednesday. BlackRock is the biggest asset manager in the world, with more than $9.4 trillion through the end of the second quarter. — CNBC’s Michael Bloom contributed to this report.
