04:18 PM EDT, 10/07/2024 (MT Newswires) -- BlackRock's (BLK) third-quarter earnings will likely surpass analyst expectations amid stronger-than-expected net flows, Morgan Stanley said in a Monday report.

The brokerage expects net flows to accelerate 8.3% year over year on an organic basis, putting Morgan Stanley 420 basis points ahead of the consensus. Long-term inflows are forecast to grow at a 5.7% organic rate, marking a sequential acceleration. The asset manager is scheduled to report results for the third quarter on Friday.

Morgan Stanley upped its earnings per share estimate for the third quarter by 4.6% to $10.73. The average analyst estimate on Capital IQ is for $10.34. Morgan Stanley's EPS forecast for the full year moved up 2.9% to $42.97, compared with the $42.37 market view.

The third-quarter estimate revision primarily reflects higher assets under management, which is partially offset by the firm's Global Infrastructure Partners acquisition that closed on Oct. 1 and pushed out its benefits to the fourth quarter, according to the report. GIP has about $170 billion assets under management, BlackRock said last week.

Morgan Stanley reiterated an overweight rating on the stock and upped its price target to $1,150 from $1,036.

On Friday's earnings call, Morgan Stanley will be listening for updates on BlackRock's private markets strategy that can help accelerate growth, it said. The GIP deal extends BlackRock into private markets with a fully scaled infrastructure investing platform and $60 billion worth of fee-paying assets under management, according to the report.

BlackRock's pending acquisition of Preqin is also expected to aid in its private markets expansion. That deal is slated to close before the end of 2024, BlackRock said at the end of June.

"As the (Federal Reserve) cuts rates, we expect idle cash on the sidelines to move into risk assets, including duration extension in (fixed income), supporting an acceleration in organic (flow) growth," the brokerage wrote.

The central bank's Federal Open Market Committee lowered its benchmark lending rate by 50 basis points last month.

Price: 938.78, Change: -10.42, Percent Change: -1.10