Morgan Stanley model suggests BlackRock could lift operating margins toward 47% in 2027 and 48% in 2028

BlackRock could have a path to additional operating margin expansion in the later part of the decade, according to an outlook cited in a market note attributed to Morgan Stanley. The analysis frames 47% operating margin as a goal for 2027 and 48% for 2028, pointing to a mix of top-line growth, higher fee rates, and automation-driven efficiency gains.

Operating margin is the share of revenue left after operating expenses, before interest and taxes. For asset managers like BlackRock, margins are closely tied to how much revenue grows relative to costs, including technology and operations expenses, as well as the economics of the firm’s advisory and asset-based fee products.

The market note attributes the projected margin expansion to several drivers. First is revenue growth, which would increase the base over which fixed or semi-fixed costs can be spread. Second is higher fee rates, which generally refers to an improvement in the average fees BlackRock earns across its product lineup, potentially reflecting mix shifts and pricing. Third is automation, a reference to the use of software, process automation, and technology to reduce or control operating costs over time.

BlackRock’s business model already depends heavily on scale. As assets under management and related product revenue change, the firm’s profitability can move as costs adjust more slowly than revenue, at least in part. Still, the note’s specific margin endpoints imply a combination of incremental growth and sustained discipline on expense growth, rather than a simple step change from one-time items.

The market item did not provide detailed methodology, assumptions, or line-by-line expense components in the information available here. It also did not disclose whether the fee-rate lift is expected to come from net inflows into higher-fee products, contractual repricing, changes in product mix, or other mechanisms.

BlackRock is the largest publicly traded asset manager in its category and earns a large portion of revenue from management and advisory fees linked to client assets. Even when markets are volatile, the firm’s profitability tends to be sensitive to both asset flows and fee economics, which is why analysts often focus on operating leverage and cost structure.

As of the information provided, the key question is whether BlackRock can translate the projected fee improvements and automation efficiencies into the operating margin targets of 47% in 2027 and 48% in 2028. Margin targets can also be affected by shifts in compensation costs, technology spending, regulatory and compliance costs, and the pace of scaling across product and distribution platforms.

Investors and analysts will likely watch for updates that clarify the durability of fee-rate trends and the extent of cost savings from automation, as well as any disclosures that indicate how quickly the firm expects operating costs to normalize relative to revenue growth. Whether the targets are met may also depend on market conditions that influence assets under management and related fee revenue.