Moody’s stock rating reiterated at Outperform by RBC, citing potential beat

Investing.com - RBC Capital has reiterated an Outperform rating on Moody’s Corp (NYSE:MCO) with a price target of $550.00. Currently trading at $490.93, InvestingPro analysis suggests the stock is trading above its Fair Value, with a P/E ratio of 41.7x and a high Price/Book multiple of 22.3x.

The firm expects Moody’s to significantly beat consensus estimates in its upcoming results on October 28, which should lead to an upward revision of the company’s fiscal year 2025 guidance. The company has demonstrated strong financial health, with a robust gross profit margin of 73% and revenue growth of 11.5% over the last twelve months.

RBC attributes the anticipated strong performance to robust billed issuance growth, though it estimates that Moody’s Analytics (MA) Annual Recurring Revenue (ARR) growth will remain flat sequentially at 8%.

The slower ARR growth is primarily due to longer sales cycles, strategic termination of a redistribution partnership in Know Your Customer (KYC) services, government efficiency programs, ESG-related headwinds, and a merger in the insurance sector.

Despite these current challenges, RBC projects that ARR growth will return to double digits in fiscal year 2026 as these headwinds anniversary.

In other recent news, Moody’s Corporation announced plans to acquire a majority stake in the Egyptian rating agency Middle East Rating & Investors Service (MERIS). This acquisition is pending regulatory approval and aims to enhance Moody’s presence in the region. In analyst updates, Seaport Global Securities initiated coverage on Moody’s with a Buy rating and a price target of $528, citing its leadership in Credit Rating and Risk Assessment. Deutsche Bank also upgraded Moody’s stock from Hold to Buy, maintaining a $528 price target, and highlighted the company’s fundamental upside potential. RBC Capital reiterated its Outperform rating with a $550 price target, emphasizing opportunities in artificial intelligence and private credit growth. Meanwhile, UBS maintained a Neutral rating with a $515 price target, noting strong structural tailwinds and near-term business segment strength. These developments reflect a range of analyst perspectives on Moody’s growth and strategic initiatives.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.