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On Monday, BMO Capital Markets adjusted its outlook for Morningstar , Inc. (NASDAQ:MORN), raising the investment research firm’s price target to $355 from the previous $339. The firm maintained its Outperform rating on the shares, signaling continued confidence in the company’s performance. According to InvestingPro data, Morningstar maintains a "GOOD" overall financial health score, with particularly strong profit metrics and a solid 60.7% gross profit margin.
The revision follows BMO Capital’s attendance at Morningstar’s annual shareholder meeting held in Chicago, where the company presented updates on various business segments. The presentations covered Morningstar Credit (DBRS) and PitchBook, two areas that have been garnering investor attention alongside the company’s margins and the Morningstar Direct Platform. With revenue growth of 10.1% in the last twelve months and a 14% compound annual growth rate over the past five years, the company shows strong momentum. (InvestingPro subscribers can access 8 additional key insights about Morningstar’s growth potential.)
Jeffrey Silber, an analyst at BMO Capital, noted the discussions at the meeting provided a clearer view on Morningstar’s potential for margin expansion. He also expressed increased assurance in the growth strategies for the company’s core business lines, including Morningstar Direct Platform, PitchBook, DBRS, and its Retirement solutions.
The analyst’s comments highlighted a positive outlook on the company’s financial health, stating, "Expect Further Margin Expansion; The tone on margin expansion was a bit better looking out and we got greater comfort on the growth strategy in key business lines."
The new price target of $355 is based on more current market multiples, reflecting BMO Capital’s updated valuation of Morningstar’s stock in light of the company’s strategic growth plans and expected margin improvements.
In other recent news, Morningstar, Inc. reported first-quarter 2025 earnings that exceeded analyst expectations. The company announced adjusted earnings per share of $2.23, surpassing the analyst consensus of $1.79 by $0.44. Revenue for the quarter was $581.9 million, slightly below the expected $589.07 million, but it still represented a 7.2% increase year-over-year. Morningstar’s operating income saw a significant rise of 23.2% to $114.1 million, with an adjusted operating income increase of 22.2% to $135.4 million. The company’s operating margin improved to 19.6% from 17.1% in the same quarter last year. Growth in PitchBook and Morningstar Credit contributed significantly, with PitchBook revenue increasing by 10.9% to $163.7 million and Morningstar Credit revenue up by 21.1% to $73.0 million. CEO Kunal Kapoor highlighted the acquisitions of Lumonic and DealX as part of their strategy to expand private credit and structured finance offerings. Despite the positive results, Kapoor expressed caution due to market volatility and economic uncertainty. The company also accelerated its stock repurchase program, buying back 368,199 shares for $109.6 million.
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