UBS maintains Buy rating, $350 target on Morningstar stock

On Monday, UBS reiterated its Buy rating on Morningstar (NASDAQ:MORN) shares, maintaining a $350.00 price target. Currently trading at $309.97, InvestingPro analysis suggests the stock is fairly valued. UBS’s endorsement follows Morningstar’s recent Investor Day, which showcased the company’s competitive edge in the expanding financial data and analytics sector.

The UBS analyst expressed confidence in Morningstar’s ability to leverage the increasing demand for data and solutions in private markets, an area expected to experience rapid growth in the coming years. With annual revenue of $2.3 billion and a solid 10% year-over-year growth rate, Morningstar’s subsidiary, PitchBook, is already recognized as a leader in the private market space, and the company is poised to explore new opportunities in Credit, Direct Platform, and Index services, among others. InvestingPro data shows the company maintains a "GOOD" overall financial health score, supporting its expansion potential.

Morningstar has chosen not to set specific margin targets at this time. Nevertheless, UBS believes there is considerable potential for margin expansion, which could further enhance the company’s growth trajectory over time. The company currently maintains a healthy gross profit margin of 61% and has demonstrated strong cash flow generation.Discover 8 additional exclusive InvestingPro Tips and comprehensive financial metrics to make more informed investment decisions.

The analyst’s positive outlook is rooted in Morningstar’s strategic positioning and the anticipated demand surge in the sectors it operates. Morningstar’s comprehensive offerings and the potential for new product developments are seen as key drivers of the company’s future success.

UBS’s maintained price target of $350.00 reflects the firm’s expectation that Morningstar will continue to thrive and deliver value to its shareholders, bolstered by its strong market presence and the growing need for specialized financial data and analytics.

In other recent news, Morningstar, Inc. reported first-quarter 2025 earnings that exceeded analyst expectations. The company posted adjusted earnings per share of $2.23, surpassing the analyst consensus of $1.79. Revenue for the quarter was $581.9 million, slightly below the consensus estimate of $589.07 million, but reflecting a 7.2% year-over-year increase. Organic revenue growth was stronger at 9.1%. Operating income rose 23.2% to $114.1 million, and the operating margin expanded to 19.6% from 17.1% in the same quarter last year.

Additionally, Morningstar’s CEO, Kunal Kapoor, highlighted growth in PitchBook and Morningstar Credit as significant contributors to the strong start to 2025, with PitchBook revenue increasing 10.9% to $163.7 million. Morningstar Credit also saw a 21.1% revenue increase to $73.0 million. In terms of strategic moves, Morningstar is expanding its private credit and structured finance offerings through the acquisitions of Lumonic and DealX. Meanwhile, BMO Capital Markets raised its price target for Morningstar to $355, maintaining an Outperform rating, following positive discussions on margin expansion and growth strategies at the company’s annual shareholder meeting.

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