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Blackstone Up to Strong Buy on Solid Q2 & Acquisitions

Zacks Equity Research

On Aug 22, Zacks Investment Research upgraded The Blackstone Group L.P. (BX) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Over the past few days, Blackstone entered into a number of acquisitions. Notably, this investment manager announced a deal to acquire 50% Haynesville assets of SWEPI LP and Shell Gulf of Mexico Inc., affiliates of Royal Dutch Shell plc (RDS.A) for $1.2 billion, thus marking its foray into the energy sector. Given the ever-increasing demand for energy and expected long-term investment benefits, we believe this deal will work in the company’s favor going forward.

Further, Blackstone is making investments in the European market, which is showing signs of recovery after a long period of sluggish growth. This could turn out to be favorable for the company in the future.

Impressive performance fees also drove Blackstone's second-quarter 2014 results reported on Jul 17. Economic net income (ENI) of $1.15 per share outpaced the Zacks Consensus Estimate by 64%. Also, the figure was up 85% from 62 cents earned in the prior-year quarter.

Organic growth was reflected in the quarter riding on higher revenues (up 57% year over year). Fee-earnings assets under management (AUM.TO) grew 19% from the year-ago quarter to $209.9 billion. Total AUM as of Jun 30, 2014 was $278.9 billion, up 21% year over year.

Blackstone has been witnessing rising earnings estimates over the last 30 days with a year-to-date return of 9.5%. Further, it has now delivered positive earnings surprises in three of the last four quarters with an average beat of 42.52%.

The Zacks Consensus Estimate for 2014 increased 3.2% to $3.84 per share, over the last 30 days. For 2015, the Zacks Consensus Estimate advanced around 1% to $3.53 per share over the same time period.

Other Stocks to Consider

Some other stocks in the same sector worth considering include AllianceBernstein Holding L.P. (AB) and Cohen & Steers Inc. (CNS) with a Zacks Rank #1.

Read the Full Research Report on BX
Read the Full Research Report on RDS.A
Read the Full Research Report on AB
Read the Full Research Report on CNS

Zacks Investment Research