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On Wednesday, Mizuho (NYSE:MFG) Securities initiated coverage on S&P Global (NYSE:SPGI) shares with an Outperform rating and set a price target of $599. The firm highlighted the credit rating agency’s robust business model and the potential for increased profitability due to technological investments. The analyst pointed out the company’s strong competitive moat, consistent pricing power, and strong incremental operating leverage as key factors behind the positive outlook.
The coverage noted the long-term inflation protection provided by S&P Global’s take-rate business model in global debt issuance. With recent technology investments, Mizuho anticipates greater profitability for the Ratings segment in the coming years. The firm also expects an attractive medium-term issuance environment and a turnaround in Market Intelligence, projecting growth following a softer performance in 2024 due to financial sector stabilization.
The report further accentuated the strength of S&P Global’s Indices, Commodities Insights, and Mobility divisions. These segments were recognized for their unique, in-demand data assets and benchmarks, which are expected to grow and contribute to margin expansion over time.
Mizuho’s valuation of S&P Global is based on a 31x multiple on the projected 2026 adjusted earnings per share (EPS) of $19.32, leading to the $599 price target. This represents a significant vote of confidence in the company’s future performance and its ability to capitalize on its strong market position and recent investments.
The Outperform rating suggests Mizuho’s belief that S&P Global shares will perform better than the overall market or its sector peers over a specified time frame. The coverage by Mizuho provides investors with a detailed analysis of the company’s prospects, backed by a solid business strategy and favorable market conditions.
In other recent news, S&P Global reported its fourth-quarter earnings, which exceeded analyst expectations. The company posted an adjusted earnings per share of $3.77, surpassing the consensus estimate of $3.36, and reported revenue of $3.59 billion, which was higher than the projected $3.43 billion. For the full year of 2024, S&P Global’s revenue increased by 14% to $14.21 billion, with a 25% rise in adjusted EPS to $15.70. The company’s Ratings division was a significant contributor to this performance. Looking forward, S&P Global has issued an optimistic guidance for 2025, forecasting revenue growth between 5.0% and 7.0% and adjusted EPS ranging from $17.00 to $17.25, which is above the current analyst consensus.
In addition, RBC Capital Markets reiterated an Outperform rating on S&P Global with a price target of $620, citing strong organic growth in the Market Intelligence segment and potential gains beyond the company’s issuance guidance. Stifel also raised its price target for S&P Global to $629 from $560, maintaining a Buy rating and noting robust performance in the Ratings segment. Both firms highlight the potential for growth and improvement, with RBC Capital focusing on financial discipline and margin expansion, while Stifel points to encouraging trends in Debt Issuance and possible favorable market conditions. Furthermore, S&P Global announced plans to return a significant portion of adjusted free cash flow to shareholders through dividends and share repurchases in 2025.
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