Earnings Preview: Blackstone Group (BX)

The Blackstone Group, LP (NYSE:BX) will post earnings for its units on Monday morning, August 13.  First Call looks like the estimates were $0.46 EPS, but investors should be cautious on any set number since the data is new and probably incomplete.  This is also the first earnings report from the company since its IPO, and it has only been public since June.

The recent market malaise in credit and borrowing has wrecked havoc on private equity leveraged buyouts in the last few weeks.  Shares are also down considerably from the IPO pricing and post-IPO open.  The good news is that shares have actually held up quite well this week and shares are up close to 10% from the post-IPO lows seen last week.  Analysts are mostly favorable on the name after its quiet period and dark coverage period ended.

Also, after the company reports earnings next week it will finally be able to start speaking again (if it chooses to).  It has been in a quiet period ahead of earnings.  Just this week it closed on a huge private equity fund to the tune of some $21 Billion.

It will be interesting to see what the company says regarding the current private equity markets.  Private equity has to be licking its chops over some of the recent drops that have been seen in many value stocks, but the flip side is that the old 7X or 10X leverage has been shut off.  Now private equity will have to do more buying with its own money rather than it leveraging so much. 

Even though this is a new company, this will actually be the first chance for the company to shed light itself on the recent weakness in private equity.  Blackstone has a shot of acting as a stabilizing force Monday, or we could see more of the same.  This is obviously one to watch.

Jon C. Ogg
August 10, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.