BlackRock (BLK) continues to demonstrate that it can grow above its organic base-fee growth target of 6% to 7% or higher, UBS Securities said in a note emailed Wednesday.
Q1 organic base fee growth of 8% exceeded BlackRock's target and was in line with the UBS estimate of 8.1%. The company's management noted share gains and "all-weather" growth across exchange traded funds, model portfolios, private markets, active ETFs and tax-aware strategies, the brokerage said.
In private credit, the retail channel is under pressure. However, the company said its institutional allocations and interests are holding up and in some cases increasing as wider spreads improve returns, while defaults remain within historical norms, according to UBS.
Private credit activity in Q1 was a bit softer, partly due to seasonal factors and uncertainty, but that is also creating new opportunities such as direct lending terms quoted 25 to 50 basis points wider, the brokerage said.
UBS added that concerns on artificial intelligence disruption to private credit have impacted valuation, but it expects BlackRock to navigate these challenges well due to its scale and history of outperformance in asset management.
The brokerage raised its 2026 and 2027 EPS estimates by nearly 1% to $53.50 and $59, respectively, driven by slightly higher management fees.
UBS maintained a buy rating on BlackRock and raised the price target to $1,270 from $1,235.
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