Private equity firm Blackstone’s (NYSE:BX) Q4 earnings are expected retreat from the prior quarter and from a year earlier as market volatility and prospects for even higher interest rates weigh on deal-making activity. The stock dipped as much 1.2% in Wednesday trading in the run-up to its quarterly report scheduled for Jan. 26 during premarket hours.

Q4 distributable EPS, based on consensus estimates, is expected to slump to $0.95 from $1.06 in Q3 and from $1.71 in the year-ago quarter. Over the past six months, analyst have lowered their expectations, with Q4 EPS consensus down 3.5% and revenue consensus off 0.4%.

Analysts, though, took note of positive developments ahead of the Q4 release. For instance, Morgan Stanley analyst Michael Cyprys said he preferred Blackstone (BX) stock as an Overweight pick, citing its potential for 12% Y/Y growth in fee-related earnings for 2023 followed by 24% Y/Y growth in 2024.

“That’s supported by an upcoming fundraising super-cycle catalyst to raise over $300b and over $180b of dry powder on the sidelines to capitalize on attractive opportunities,” he wrote in a recent note.

And while BX limited withdrawals late last year from its $70B Blackstone Real Estate Investment Trust, Cyprys expects management to issue FRE guidance for 2023 “that’s likely ahead of buyside expectations.”

Similarly, JPMorgan analyst Kenneth Worthington earlier this week upgraded BX to Overweight from Neutral as the company’s sizable fundraising for its flagship funds are seen to drive even higher FRE for this year and the next. FRE is expected to drop 43% Y/Y to $1.04B, according to the Visible Alpha consensus.

The consensus for Q4 revenue stood at $2.64B, up from $2.59B in the prior quarter and down from $4.46B a year before.

In the event that the U.S. economy enters a severe downturn, fueled by the Federal Reserve’s tightening cycle to lower inflation, Blackstone (BX) would likely see both its existing assets under management and fundraising suffer, Seeking Alpha contributor Samuel Smith noted last week. Still, the firm is “in excellent shape to capitalize on opportunities that a sustained downturn would likely provide,” he added, giving the stock a Buy rating.

Fellow SA contributor Bay Area Ideas viewed BX as a Hold in mid-January as its “long-term growth story is robust but the near-term is much more uncertain.”