CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
We decrease our 12-month target price by $40 to $400 on a forward P/E of 34.7x our 2024 earnings estimate, a premium to MCO’s three- and 10-year forward historical averages of 30.5x and 25.6x, respectively, given expectations for a strong rebound in debt issuance and margin expansion. We lower our 2023 EPS estimate by $0.12 to $10.15 and increase 2024’s by $0.11 to $11.53. MCO posted Q3 adjusted EPS of $2.43 versus $1.85, $0.15 higher than consensus on revenue that beat expectations by 1%. MCO’s analytics segment (MA) saw revenue growth accelerate to 13%, given strong traction in the KYC business. Encouragingly, the growth has not come at the cost of efficiency and the segment saw its adjusted operating margin surge 330 bps to 33.6%. The ratings segment (MIS) saw revenue rise 18%, although results remained well below 2020 and 2021 levels. Looking forward, we expect continued outperformance from the MIS segment as M&A picks back up and refinance activity recovers from current severely depressed levels.