Blackstone Earnings Expected to Decelerate in Q2

July 20, 2023: Blackstone (NYSE: BX), a prominent private equity firm, is projected to experience a second consecutive slowdown in earnings for the second quarter, according to consensus estimates. The challenging higher interest rate environment makes it difficult for the company to raise funds and finance deals.

On July 20, during the premarket session, Blackstone is scheduled to release its Q2 earnings report. This report will provide insights into various aspects, such as the growth of BX’s dry powder, the performance of its real estate funds, and key metrics like assets under management and fee-related earnings.

David Ksir, the Investing Group Leader of ‘High Yield Landlord,’ warned in mid-June about the “very cyclical” nature of Blackstone’s earnings due to its performance-oriented fee structure. The possibility of higher inflation and prolonged higher interest rates may result in slower growth of assets under management, potentially falling short of forecasts.

Consensus estimates predict that Q2 distributable earnings per share (EPS) will decline to $0.92 from $0.97 in Q1 and $1.49 in the same period last year. If Blackstone falls below the Wall Street consensus, it would be the first earnings miss since June 2020.

In terms of revenue, Blackstone is expected to generate $2.40 billion in Q2, a decrease from $2.49 billion in Q1 and $4.15 billion in Q2 of the previous year. The company’s sales figures have previously surprised to the downside in the last two quarters.

Given the challenging macroeconomic landscape, analysts have revised their EPS and revenue expectations downward over the past three months. There have been 12 downward revisions in EPS estimates (compared to one upward revision) and four in revenue estimates (compared to zero upward revisions).

As of mid-afternoon trading, BX stock has drifted up 1.3%.

Investors and industry analysts will closely watch the upcoming earnings report to gauge Blackstone’s performance amid the ongoing economic challenges. The company’s ability to navigate the headwinds and adapt its strategies will be crucial in shaping its financial outlook. Investors should closely monitor the Q2 results and management’s commentary for insights into Blackstone’s future performance and market prospects.