NEW YORK -- An analyst raised his rating and price target for BlackRock on Monday, saying that there is a good buying opportunity for the investment manager's stock.
William Katz of Citi Investment Research boosted BlackRock Inc. to "Buy" from "Neutral" and increased its price target to $220 from $190. In a client note, Katz said that BlackRock's stock is only up 5 percent for the year to date, compared with a 16 percent rise for the Standard & Poor's 500 and a median increase of 23 percent for traditional managers.
With the S&P 500 predicted to continue to climb through 2013, Katz says investors may look to purchase stocks that are lagging behind, "particularly a high-quality franchise such as BlackRock that derives a majority of its earnings from equities and offers a strong global platform and dominant exchange-traded fund footprint."
Katz says while some investors are concerned that BlackRock may be designated as a systemically important financial institution, he sees the designation as unlikely. If BlackRock did receive an SIFI designation, it would be regulated by the Federal Reserve and required to hold a larger capital cushion against losses.
Katz says the designation is unlikely because BlackRock doesn't satisfy all of the requirements and is already heavily regulated.
The analyst also believes that worries that CEO Laurence Fink may leave the company to potentially replace Treasury Secretary Timothy Geithner should President Barack Obama get re-elected are overblown. Katz says Fink seemed to put such concerns at ease during commentary he gave last week when he said that he believes he will "shock the world" with how long he remains as BlackRock's CEO. Katz feels these comments mean Fink is likely staying put in his CEO post.
Katz also believes that Fink's relative importance is now less meaningful than in the past, saying that BlackRock is less reliant on him than when it was in a more rapid growth stage.
Blackrock shares closed at $187.39 on Friday. They are down 10.5 percent from a 52-week high of $209.37 in early April. They traded as low as $146.53 last October.