Can Blackstone Stock Recover To $100? Yes, This Is Achievable (NYSE:BX)

Elevator Pitch

I still assign a Buy rating to Blackstone Inc.’s stock (NYSE:BX).

With my prior update for BX written on October 24, 2022, I reviewed Blackstone’s Q3 2022 financial performance. In the current write-up, my attention lies with BX’s share price recovery prospects.

It is realistic to expect Blackstone’s shares to achieve a meaningful recovery to trade above $100 in due course. Investor concerns relating to Blackstone Real Estate Investment Trust or BREIT appear to be overdone; and I have a favorable view of BX’s long-term growth potential. BX continues to justify a Buy rating in my view.

Can Blackstone Stock Reach $100 In 2023?

Blackstone’s shares last traded above $100 in mid-November this year. BX’s shares ended the November 14, 2022 trading day at $101.41, but its stock price has since fallen by -26% in the past one and a half months to close at $74.91 as of December 23, 2022.

Notably, BX saw its stock price drop by -7% from $91.53 as of November 30, 2022 to $85.04 as of December 1, 2022, following negative news flow with regards to Blackstone Real Estate Investment Trust or BREIT. A December 2, 2022 Seeking Alpha News article noted that Blackstone began “limiting withdrawals” for BREIT after witnessing “elevated calls for redemption.” It is clear that the market’s worries about BREIT had been the main reason for Blackstone’s recent share price weakness.

In my view, Blackstone’s stock should be able to recover and go past the $100 mark again next year. Concerns relating to BREIT are already priced in judging by BX’s stock price performance, and investors will eventually appreciate the fact that such worries aren’t justified.

It is important to note that the increase in redemptions for BREIT had little to do with the REIT’s performance or fundamental issues.

At Goldman Sachs’ (GS) 2022 US Financial Services Conference on December 7, 2022, Blackstone disclosed that BREIT’s recent “redemptions were preponderantly coming from Asia.” Specifically, Asian investors in general had a preference of buying shares on margin, and they were also hurt by the weakness in Asia’s equity markets (particularly Mainland China and Hong Kong). This helped to explain why BREIT suffered from higher-than-expected redemptions in recent times.

In fact, the historical performance of BREIT has been reasonably good, and there is no reason for investors with long investment horizons and limited liquidity needs to part ways with BREIT.

BX revealed at the GS 2022 US Financial Services Conference that BREIT had achieved a six-year CAGR of +13%, which is three times as good as the REIT benchmark’s performance in the same time frame. Moreover, BREIT’s assets are concentrated in geographies and property sub-segments with healthy growth prospects. Approximately 80% and 70% of BREIT’s property portfolio are allocated to the Sun Belt region and apartments and warehouse properties, respectively as highlighted at the recent early-December GS conference.

In conclusion, it is realistic to see Blackstone’s shares return to the $100 mark in the near future, when the market realizes that the long-term fundamentals for BREIT are good and unaffected by recent redemptions.

What Are Price Targets For Blackstone?

According to data obtained from S&P Capital IQ, the current median Wall Street target price for Blackstone is $100.50. This implies that the sell-side analysts also hold the view that it isn’t challenging for BX’s stock price to recover to above $100 in the coming months.

Assuming that Blackstone’s share price goes up to $100, this will translate into a +34% upside as compared to BX’s last traded stock price of $74.91 at the close of the December 23, 2022 trading day.

BX Stock Key Metrics

Apart from the analysts’ consensus price target, the other key metrics for BX relate to the changes in the company’s forward-looking financial projections.

In the last three months, Blackstone’s consensus Q4 2022 and full-year 2023 distributable earnings per share estimates have been reduced by approximately -10% and -12%, respectively. Over the same period, 10 of the 19 analysts covering BX’s stock cut their Q4 2022 bottom line forecasts for the company, while 12 of them lowered their FY 2023 distributable earnings per share projections for Blackstone.

In a nutshell, the market’s expectations for Blackstone’s near-term financial performance are rather low. This makes it easier for BX to meet or even surpass analysts’ expectations with its future financial results for the quarters ahead. It also means that negative earnings surprises and post-results price corrections are less probable.

Is Blackstone A Good Long-Term Investment?

I think that Blackstone remains an attractive investment candidate for the long run, notwithstanding its recent stock price correction.

There are some figures which offer an indication of BX’s tremendous growth runway.

According to management’s comments at the GS 2022 US Financial Services Conference held in early-December, the total addressable market for retail investors is as large as $80 trillion, and BX only boasted an AUM (Assets Under Management) of around $230 billion in this space.

Separately, an October 7, 2022, Morgan Stanley (MS) research report (not publicly available) titled “Does Market Upheaval Tarnish the Golden Age?” mentioned that private markets represented only 8.6% of total worldwide assets under management in 2021. The relatively low penetration rate of private market supports MS’ prediction that the global AUM for private markets will expand by an annualized growth rate of +12% from $9.6 trillion for 2021 to $17.0 trillion to 2026.

BX, which describes itself as “the world’s largest alternative asset manager” in its media releases, is certainly one of the best ways to invest in the growth of private markets for the future.

Is BX Stock A Buy, Sell, Or Hold?

BX’s stock remains a Buy based on my analysis. Short-term concerns with regards to BREIT are reflected in BX’s recent share price weakness, while the long-term growth prospects of Blackstone are still appealing.