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Dec 9 (Reuters) - Wachovia Capital Markets downgraded BlackRock Inc (BLK.N) to "market perform" from "outperform," citing continued challenges for non traditional asset management products and pressure on earnings.
The largest publicly traded U.S. asset manager's earnings should continue to feel the brunt of weak equity markets, a strong U.S. currency, investment losses, industry outflows and softer performance fees, analyst Douglas Sipkin wrote in a note to clients.
Although BlackRock remains the most diverse asset management company, sustained weakness in non traditional asset classes like hedge funds, private equity, and loans should pressure results, Sipkin said.
The analyst also cut his 2008 and 2009 profit estimates for the company, and said assets under management, a key driver of revenue at money managers, is expected to fall 6 percent to 9 percent in the current quarter.
Sipkin expects earnings per share of $7.37 and $7.59 for 2008 and 2009, respectively, for the company, down from his earlier estimates of $7.45 and $8.37.
BlackRock, a winner from the year-and-a-half-long credit crisis because of its fixed income expertise and conservative investment style, could not escape the whiplash from falling stock and bond markets and chaos in the money market as the credit markets seized in September
The New York-based company posted a worse-than-expected 14.7 percent drop in third-quarter profit in October as slumping markets and the worsening credit crisis sparked outflows from its money-market funds and slashed its hedge fund fees.
Shares of BlackRock, owned 49 percent by Merrill Lynch & Co MER.N and 34 percent by PNC Financial Services Group (PNC.N), closed at $138.13 Monday on the New York Stock Exchange.
They have fallen 36 percent so far this year, outperforming the S&P asset managers and custody banks index .15GSPAMCB, which is down 48 percent. (Reporting by Anurag Kotoky in Bangalore; Editing by Deepak Kannan)