BofA Securities analyst Craig Siegenthaler expresses his view on Blackstone Inc's (NYSE: BX) upcoming fourth quarter FY23 earnings this Thursday.
The analyst expects a more bullish outlook on key fundamental metrics (fundraising, investing, realizations) and stated that the company CEO highlighted six large investment announcements since late fourth-quarter FY23 at Davos last week.
The analyst noted that BREIT Fee related performance revenues (FRPR) adjustment following a negative return in December and Blackstone Property Partners (BPP) Life Sciences FRPR removal following a negative return in 4Q23 erased its 9/30/23 net accrued carry, driven by BX real estate FRPR.
The analyst expects the near-term EPS revisions to have very little impact on 2025-26 EPS.
The analyst writes that fundholders could react to negative quarterly performance following significant redemption improvement through December.
However, Siegenthaler expects the improving trajectory to restart by March and for BREIT limits to end by mid-2024. The analyst also expects a very large increase in sales levels following no limits for three months.
Siegenthaler estimates EPS of $5.09 (vs. $5.14 estimate) in FY24 and $6.48 (vs. consensus of $6.17) in FY25.
Overall, the analyst says that the BX stock remains undervalued as its three- to five-year earnings growth trajectory and earnings quality transformation are underappreciated, supported by significant growth potential in its retail and insurance businesses.
The analyst maintained a Buy rating with a price target of $135 on the stock.
Price Action: BX shares are trading lower by 1.9% to $118.65 on the last check Tuesday.