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On Wednesday, Mizuho (NYSE:MFG) initiated coverage on Moody’s Corporation (NYSE:MCO), assigning the stock a Neutral rating and establishing a price target of $504.00, representing potential upside from the current price of $443.85. The firm’s analysis highlighted Moody’s credit rating agency as a high-quality business with a strong competitive moat and consistent pricing power, which are attributed to the high value of credit ratings. According to InvestingPro data, the stock is currently trading at a P/E ratio of 39.4x, suggesting a premium valuation.
Mizuho’s coverage points to Moody’s long-term inflation protection, stemming from its take-rate business model on global debt issuance. The firm anticipates that recent technology investments by Moody’s will lead to greater profitability in both Moody’s Investors Service (MIS) and Moody’s Analytics (MA) in the years ahead. InvestingPro data reveals the company’s strong dividend track record, having maintained payments for 28 consecutive years with impressive 22.1% dividend growth in the last twelve months.
The analyst predicts a favorable medium-term setup for debt issuance, which should support Moody’s ability to significantly expand margins and compound revenue at a high single-digit percentage rate. This growth is expected to be driven by a stabilization in the financial services industry and Moody’s efforts to deepen customer relationships through cross-selling its Decision Solutions products to existing Research & Insights and Data & Information clients.
Mizuho’s valuation of Moody’s is based on a 32x multiple on the projected adjusted earnings per share (EPS) of $15.74 for the year 2026. This calculation underpins their $504 price target for the company’s stock. The firm’s outlook suggests confidence in Moody’s potential for sustained financial performance and market position, with analysts forecasting EPS of $14.20 for FY2025.
In other recent news, Moody’s Corporation reported strong quarterly financial results, surpassing expectations primarily due to improved profit margins. This performance has led to a series of revised price targets from major financial firms. BMO Capital Markets increased its price target for Moody’s from $481 to $531, citing the company’s robust quarterly performance and optimistic forward guidance. Similarly, Stifel raised its price target from $459 to $533, acknowledging a more positive outlook for Moody’s Investors Service revenue and Moody’s Analytics margins. RBC Capital Markets maintained an Outperform rating on Moody’s, despite adjusting its Market Intelligence Services revenue estimates downward to $647 million due to current market challenges. Additionally, Moody’s announced an executive transition, with Jason Phillips set to succeed Caroline Sullivan as Chief Accounting Officer and Controller, ensuring a smooth leadership change. The company also revealed a restructuring initiative in its Analytics division, aiming to shift towards integrated platforms, which is expected to support medium-term growth. These developments highlight Moody’s strategic adjustments and the confidence analysts have in its future performance despite short-term challenges.
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