BlackRock (BLK), the largest publicly traded asset manager in the US, is scheduled to report third quarter results on Tuesday, October 20, 2009. In the last two quarters, the company's actual earnings exceeded the market's consensus.

Analysts' estimates for the quarter ending September 2009 (Q3) range from a low of $1.68 to a high of $2.17, with a consensus of $1.901.

For the fiscal quarter ending September 2009, the consensus EPS forecast has increased over the past week from $1.848 to $1.901 (2.87%) and increased over the past month from $1.790 to $1.901 (6.20%). Of the 10 analysts making quarterly forecasts, 6 raised and none lowered their forecast. The upper revision in estimates can be attributed to a surge in stock markets since March lows, improving investment flows and positive operating leverage. BlackRock's recent acquisition of Barclays asset-management arm, Barclays Global Investors (deal, which put an additional $2.7 trillion under BlackRock's management, grew the firm to roughly twice the size of its nearest competitor), also provides the company with potential growth. About $200 million in cost synergies should also be realized in 2010 because of the acquisition, which will help improve margins.

BlackRock could benefit from the National Association of Insurance Commissioners' (NAIC) decision to award bond analysis work on residential mortgage-backed assets to BlackRock, rather than depend on major credit rating firms. This type of work wouldn't be new to BlackRock, which won contracts to help the government assess complex securities at collapsed Bear Stearns, at nearly collapsed American International Group Inc., and at mortgage giants Fannie Mae and Freddie Mac. It's also one of the fund managers in the Treasury Department's Public Private Investment Program. Moreover, BlackRock is also looking to eliminate or significantly reduce its dependence on WallStreet firms such as Goldman Sachs (GS), Morgan Stanley (MS), JPMorgan Chase (JPM) or Citigroup (C) to execute equity trades. That could help save the firm a lot of money going out as commissions.

Recently, BlackRock won a mandate to provide advisory services and fund manager selection for the 410 million pound UK pension fund of the PA Consulting group. Blackrock estmates that up to 300 billion pounds in UK assets could move to fiduciary management by 2012 as British schemes follow their Dutch peers in outsourcing more of the investment process to a fund manager or consultant. BlackRock should benefit from the shift.

Going forward, for the fiscal year ending December 2009, the consensus EPS forecast has increased over the past week from $6.372 to $6.381 (0.14%) and increased over the past month from $6.240 to $6.381 (2.26%). Of the 9 analysts making yearly forecasts, 7 raised and none lowered their forecast.

The company's shares closed Wednesday at $226.166, compared to the 52 week range of $88.91 - $227.86. The stock seems to be overvalued at the current levels by 11%.