Goldman Sachs analyst Alexander Blostein reiterated a Buy rating on BlackRock, Inc. (NYSE:BLK) with a price forecast of $929.
According to Blostein, BlackRock's latest acquisition — buying Preqin, a private markets data and solutions provider, for$3.2 billion — will provide a meaningful opportunity for revenue synergies, primarily from increased distribution via BlackRock's broader network.
This transaction, funded with $3 billion of incremental debt, with just $200 million in cash, helps BlackRock expand into the emerging private markets data segment.
Read Also: BlackRock's Aladdin Gets Smarter – $3.2B Deal Adds Preqin's Private Markets Data
According to Preqin's reported financials, the company generated $166 million in revenues in 2022, and BlackRock expects it will generate ~$240 million in revenues in 2024 (relative to Visible Alpha Consensus revenue estimates of $20 billion for BlackRock in 2024).
The transaction implies a valuation of ~13X management's 2024 revenue estimates, the analyst adds.
BlackRock also called out that the deal will have no impact on the previously communicated pace of dividends and repurchases – BlackRock previously spoke to expectations of at least $375 million of quarterly repurchases for the remainder of the year.
Over time, management sees opportunities to drive operating leverage and more profitable growth as Preqin is integrated into the BlackRock ecosystem, the analyst adds.
Price Action: BLK shares are trading higher by 0.39% to $785.28 at last check Tuesday.
- Why Rivian Automotive Shares Are Gaining Tuesday
Image: Shutterstock