BMO Capital Markets has adjusted its outlook on Moody's (NYSE:MCO) Corp (NYSE: MCO) by increasing the price target to $464 from the previous $455 while maintaining a Market Perform rating on the stock.
This change comes after an evaluation of the company's third-quarter performance in its Moody's Investors Service (MIS) division, which surpassed expectations.
The analyst at BMO Capital Markets noted that although Moody's management did not provide specific third-quarter guidance for its MIS segment, the annual guidance had suggested flat growth in issuance for the second half of 2024 and a mid-teens year-over-year decline in the fourth quarter. Despite the anticipated decline in the fourth quarter, the third quarter's performance was notably better than expected.
The optimistic revision is based on publicly available data and the billed issuance results of S&P Global Inc. (SPGI) through August, which indicated stronger momentum for Moody's. The analyst believes that while a year-over-year decline in the fourth quarter of 2024 could still happen, it might not be as steep as initially expected.
In other recent news, Moody's Corporation has experienced a series of significant developments. The company's third-quarter rated debt issuance saw a noteworthy 50% year-over-year increase, prompting Stifel to maintain a Hold rating on Moody's shares with a price target of $454.
The firm also revised its earnings per share estimates for Moody's upward. Moody's has also been closely monitoring the French government's 2025 budget proposal, which could potentially lead to a downgrade.
Evercore ISI initiated coverage on Moody's with an Outperform rating and a price target of $521, based on anticipated positive earnings revisions and potential early traction of Moody's genAI product cycle. Moody's has also expanded its insurance analytics capabilities through the acquisition of Praedicat, a casualty insurance sector analytics firm.
Additionally, Moody's initiated a $500 million senior notes offering with a 5% interest rate, maturing in 2034, underwritten by BofA Securities, Inc., Citigroup Global Markets Inc., HSBC Securities (USA) Inc., and J.P. Morgan Securities LLC. This move aims to strengthen the company's financial structure.
InvestingPro Insights
Recent data from InvestingPro adds depth to BMO Capital Markets' analysis of Moody's Corp (NYSE:MCO). The company's market capitalization stands at $87.31 billion, reflecting its significant presence in the financial services sector. Moody's has demonstrated strong financial performance, with a revenue growth of 18.56% over the last twelve months as of Q2 2024, and an impressive 21.62% growth in quarterly revenue for Q2 2024.
These growth figures align with the analyst's optimistic revision and support the notion of stronger-than-expected performance in Moody's Investors Service (MIS) division. Additionally, Moody's robust profitability is evident in its 73.01% gross profit margin and 41.21% operating income margin for the last twelve months.
InvestingPro Tips highlight Moody's consistent dividend growth, having raised its dividend for 14 consecutive years. This demonstrates the company's financial stability and commitment to shareholder returns, which may contribute to its market performance as noted in BMO's Market Perform rating.
Another relevant InvestingPro Tip indicates that 8 analysts have revised their earnings upwards for the upcoming period, aligning with BMO's increased price target and suggesting broader market confidence in Moody's future performance.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Moody's Corp, providing a deeper understanding of the company's financial health and market position.
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