CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
We increase our 12-month target price by $60 to $460, on a forward P/E of 36.3x our 2025 earnings estimate, a premium to Moody’s Corporation (NYSE:MCO)’s three- and 10-year forward historical averages of 31.4x and 26.0x, respectively, given expectations for margin expansion and rapid earnings growth. We lower our 2024 EPS estimate by $0.39 to $11.14 and start 2025’s at $12.63. MCO posted Q4 adjusted EPS of $2.19 versus $1.60, $0.13 below consensus on revenue of $1.48B (+15% Y/Y). MIS (the ratings segment) saw revenue surge 19% as debt capital markets improved from previous depressed levels. Decelerating growth (11% in 4Q vs. 13% in 3Q) was seen in MA (the analytics segment), as a rising demand for MCO’s ratings data feeds was met with a slowdown in Decision Solutions. MCO saw its adj. operating margin expand 560 bps to 42.6% as expenses rose just 4%. With transaction revenue sitting at muted levels (29% in 4Q vs. historic average of ~40%), we see minimal downside risk and expect outsized MIS growth through 2025 on rising debt issuance.