On Tuesday, Stifel, a financial services firm, increased its price target of Moody's Corp (NYSE:MCO) shares to $374 from $350, while keeping a Hold rating on the stock.
This adjustment comes in the wake of Moody's solid performance in the first quarter of 2024, which the analyst attributes to significant business advancements achieved during the period.
The unchanged revenue guidance for Moody's Investors Service (MIS) was highlighted, despite the company's robust first-quarter results. The firm's cautious stance for the second half of the year is due to the substantial pullforwards in the quarter and the potential risks looming in the latter half of 2024. However, Moody's is now leaning towards the upper end of its revenue guidance ranges.
The analyst noted that the forecast for Moody's Analytics (MA) revenue is influenced by foreign exchange headwinds, rather than any fundamental shift in the business's growth trajectory. As a result, Stifel has made revisions to its financial model, primarily to account for the considerable pullforwards that bolstered MIS's first-quarter strength.
The increase in the target price to $374 reflects the application of Info Services 2024 enterprise value to EBITDA and price-to-earnings valuations, excluding Moody's itself, to Stifel's 2025 estimates for the company.
Although there was a slight decrease in estimates, the valuation has risen due to higher comparative valuations and a greater emphasis on the projections for 2025.
The analyst's comments suggest a careful analysis of Moody's financial outlook, taking into account both the recent performance and the anticipated future market conditions.
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