Blackstone faces private credit disruption risks amid market decline
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 5d ago
0mins
Should l Buy BX?
Source: seekingalpha
Blackstone Inc (BX) shares fell 4.70% as it hit a 20-day low, reflecting broader market weakness with the Nasdaq-100 down 1.24% and S&P 500 down 1.23%.
Blackstone President John Gray warned of potential disruption risks in the private credit sector due to technological advancements like AI, which could affect valuations. He noted that while the private credit market remains healthy, there are concerns about capital misallocation and the overall health of the industry, especially following stress cases like First Brands. This cautious sentiment has contributed to a 13% decline in Blackstone's stock year-to-date.
The implications of these warnings suggest that investors are becoming increasingly wary of the private credit market's future, which could lead to further volatility in Blackstone's stock as market participants reassess their positions.
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Analyst Views on BX
Wall Street analysts forecast BX stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for BX is 176.60 USD with a low forecast of 166.00 USD and a high forecast of 205.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
12 Analyst Rating
5 Buy
7 Hold
0 Sell
Moderate Buy
Current: 126.830
Low
166.00
Averages
176.60
High
205.00
Current: 126.830
Low
166.00
Averages
176.60
High
205.00
About BX
Blackstone Inc. is an alternative asset manager. Its asset management includes global investment strategies focused on real estate, private equity, infrastructure, life sciences, growth equity, credit, real assets, secondaries, and hedge funds. Its Real Estate segment comprises its management of opportunistic real estate funds, Core+ real estate funds, and real estate debt strategies. Its Private Equity segment includes its management of flagship Corporate Private Equity funds, sector and geographically focused Corporate Private Equity funds, core private equity funds, an investment platform, and others. Its Credit & Insurance segment consists of Blackstone Credit & Insurance, which is organized into three overarching strategies: private corporate credit, liquid corporate credit and infrastructure and asset-based credit. Its Multi-Asset Investing segment is organized into four investment platforms: Absolute Return, Multi-Strategy, Total Portfolio Management, and Public Real Assets.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- AI Factory Expansion: The financing will support the expansion of Firmus' artificial intelligence factory platform, leveraging Nvidia chips, which is expected to enhance its market position in the AI sector across multiple Australian sites.
- Infrastructure Scaling: Project Southgate is projected to scale up to 1.6 gigawatts of infrastructure by 2028, indicating Firmus' ambition to meet the growing demand for AI computing, potentially attracting further investor interest.
- GPU Deployment Plans: Firmus AI factories are under construction at multiple locations with plans to deploy thousands of GPUs, which not only enhances production capacity but may also drive technological advancements and innovation across the industry.
See More
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- Declining Private Equity Deal Volumes: Morgan Stanley noted that technology services deal volumes account for nearly 21% of overall private equity activity, with TPG, Carlyle, and KKR slightly above this level, indicating weakened market confidence in software-related investments.
- Rising Loan Risks: Software borrowers are shouldering an average debt-to-EBITDA ratio of 7.4 times, significantly higher than the 5.9 times average across a $1 trillion loan pool studied by KBRA, highlighting the private credit market's heavy reliance on the software sector and its associated risks.
- Portfolio Review: Companies like Ares and KKR are reviewing their portfolios to assess the impact of AI on their software investments, demonstrating a cautious approach among asset managers in the face of market volatility.
See More
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- Private Credit Sector: The emergence of private credit "cockroaches" indicates a shift in the market, particularly affecting the software sector.
- Investment Opportunities: This situation may present new investment opportunities in shares of business development companies that hold the debt of these affected companies.
See More
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- Opportunities in Business Development Companies: This situation may present investment opportunities in business development companies that hold the debt of affected firms.
See More
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- Market Trends: The surge in demand for data centers driven by artificial intelligence and cloud computing places Sabre, a manufacturer of power infrastructure components, in a rapidly growing market that has attracted substantial private capital.
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