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Why You Should Drop BlackRock from Your Portfolio Now
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On Jun 20, 2016, we issued an updated research report on BlackRock Inc. (BLK - Free Report) . While this asset management company enjoys a diversified revenue stream and a strong global presence, soaring expenses amid top line pressure make us apprehensive.
Given the nature of its business, BlackRock depends significantly on Investment advisory, administration and securities lending fees (comprising about 90% of its total revenue as of Mar 31, 2016). These types of revenues are adversely impacted by market fluctuations and foreign exchange translations. Hence, owing to the current weakness and uncertainty in global economy, the company’s top line could be hurt in the near term.
Additionally, BlackRock’s increased dependence on overseas revenues adds to its woes. Though this leads to diversification, the present volatile global scenario is expected to hamper revenue growth to some extent.
Also, continuously rising operating expenses is another major concern for BlackRock. The company witnessed a persistent rise in adjusted operating expenses at a CAGR of 4.2% over the last five years (as of the end of 2015). Increased regulatory compliance costs, G&A expense and higher marketing costs are likely to keep expenses high in the quarters ahead.
Further, BlackRock is a highly leveraged company, with a debt/equity ratio of 1.25 compared with industry average of 0.18. The stock performance is not impressive either, having declined over 3% in the last year.
Notably, driven by these concerns the recent estimate revisions remain unfavorable, indicating analysts’ bearish stance on BlackRock. Over the last 60 days, the stock witnessed three downward estimate revisions (no upward movement) for both 2016 and 2017.
BlackRock, currently, has a Zacks Rank #4 (Sell).
Stocks Worth a Look
Some better-ranked investment managers include Eagle Point Credit Company Inc. (ECC - Free Report) , OM Asset Management plc and Manning & Napier, Inc. , each carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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Why You Should Drop BlackRock from Your Portfolio Now
On Jun 20, 2016, we issued an updated research report on BlackRock Inc. (BLK - Free Report) . While this asset management company enjoys a diversified revenue stream and a strong global presence, soaring expenses amid top line pressure make us apprehensive.
Given the nature of its business, BlackRock depends significantly on Investment advisory, administration and securities lending fees (comprising about 90% of its total revenue as of Mar 31, 2016). These types of revenues are adversely impacted by market fluctuations and foreign exchange translations. Hence, owing to the current weakness and uncertainty in global economy, the company’s top line could be hurt in the near term.
Additionally, BlackRock’s increased dependence on overseas revenues adds to its woes. Though this leads to diversification, the present volatile global scenario is expected to hamper revenue growth to some extent.
Also, continuously rising operating expenses is another major concern for BlackRock. The company witnessed a persistent rise in adjusted operating expenses at a CAGR of 4.2% over the last five years (as of the end of 2015). Increased regulatory compliance costs, G&A expense and higher marketing costs are likely to keep expenses high in the quarters ahead.
Further, BlackRock is a highly leveraged company, with a debt/equity ratio of 1.25 compared with industry average of 0.18. The stock performance is not impressive either, having declined over 3% in the last year.
BLACKROCK INC Price
BLACKROCK INC Price | BLACKROCK INC Quote
Notably, driven by these concerns the recent estimate revisions remain unfavorable, indicating analysts’ bearish stance on BlackRock. Over the last 60 days, the stock witnessed three downward estimate revisions (no upward movement) for both 2016 and 2017.
BlackRock, currently, has a Zacks Rank #4 (Sell).
Stocks Worth a Look
Some better-ranked investment managers include Eagle Point Credit Company Inc. (ECC - Free Report) , OM Asset Management plc and Manning & Napier, Inc. , each carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>