BlackRock (BLK) is expected to deliver strong Q2 results driven by ETF demand, with shares supported by growth potential, margin expansion, and an attractive valuation, UBS Securities said in a note Tuesday.

Analysts said they expect strong ETF demand to offset weaker cash and institutional flows, driving organic base fee growth of about 7.8%, above the company's 6% to 7% or higher guidance range. The company is set to report its Q2 financial results before market open on July 15.

With shares trading at a 16.4x price-to-earnings ratio, below historical average, the stock is viewed as attractive given its growth outlook, margin expansion potential, and ability to withstand industry concerns such as artificial intelligence disruption and perpetual futures, according to the note.

Analysts said the company is expected to see higher Q2 operating income and management fees are expected to reach $5.6 billion, above the $5.5 billion consensus estimate, driven by higher assets under management and fee rates. UBS estimates average AUM at $14.5 trillion, above the $14.3 trillion consensus estimate.

The brokerage raised its 2026 and 2027 EPS estimates to $53.87 and $60.48, respectively, from $53.50 and $59.00, "as higher management fees are slightly offset by lower performance fees and higher compensation."

UBS Securities has a buy rating and a $1,270 price target on BlackRock.

Shares of BlackRock were down more than 2% in Wednesday trading.

Price: 985.58, Change: -23.85, Percent Change: -2.36