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On Tuesday, BMO Capital maintained its Outperform rating on S&P Global (NYSE:SPGI), with a steady price target of $537.00. The firm's optimism is based on the observed increase in billed issuance, which saw a significant rise of 51% year-over-year in August. This uptick followed an even more substantial surge in July, with a record 124% year-over-year increase.
The positive trend in debt issuance is further supported by data for September, which suggests that investment-grade (IG) issuance reached $185 billion, ranking it as the eighth largest month on record for the IG market. These figures point to a robust third quarter for 2024, likely surpassing initial expectations.
BMO Fixed Income strategists have forecasted that IG issuance for October will reach $91 billion. While this projection is slightly below the historical average of $95 billion since 2016, it's worth noting that recent months have consistently seen actual figures outperform estimates.
The sustained growth in debt issuance activity is a key factor in BMO Capital's analysis, underpinning the firm's confidence in S&P Global's performance. The data indicates a healthy credit market environment, which is typically beneficial for companies like S&P Global that are involved in providing ratings and analytics for the debt market.
In other recent news, S&P Global has been demonstrating a robust financial performance with a significant 16% surge in total revenue. This increase was driven by a 60% increase in transaction revenue from the ratings division, and an 8% year-over-year increase in subscription products. Morgan Stanley, Goldman Sachs and BMO Capital have all raised their price targets on S&P Global shares, citing strong earnings and revenue results.
S&P Global's management has significantly upgraded its full-year 2024 outlook for rated debt issuance, jumping from a 6-10% increase to approximately 25%. This adjustment is expected to result in mid-teens growth in Ratings revenue.
In addition to the strong performance of the Ratings business, S&P Global's non-Ratings divisions are collectively continuing to achieve robust high-single-digit revenue growth, led by the Indices and Commodity Insights segments.
In other recent developments, S&P Global successfully completed the acquisition of Visible Alpha, enhancing the company's financial modeling capabilities. CEO Doug Peterson is set to retire, with Martina Cheung taking over as CEO starting November 1st.
InvestingPro Insights
S&P Global's strong market position is further underscored by recent InvestingPro data and tips. The company's market capitalization stands at an impressive $160.77 billion, reflecting its significant presence in the financial information and analytics sector. This aligns with the positive outlook on debt issuance activity highlighted in the article.
InvestingPro Tips reveal that S&P Global has maintained dividend payments for 54 consecutive years and has raised its dividend for 11 consecutive years. This consistent dividend track record demonstrates the company's financial stability and commitment to shareholder returns, which is particularly noteworthy given the robust debt issuance environment described in the article.
The company's revenue growth of 10.09% over the last twelve months and a strong quarterly revenue growth of 14.45% in Q2 2024 further support the positive sentiment expressed by BMO Capital. These growth figures likely reflect the increased demand for S&P Global's services amidst the surge in debt issuance activity.
It's worth noting that S&P Global is trading near its 52-week high, with a price at 97.27% of its 52-week high. This performance aligns with the optimistic outlook on the company's prospects in the current market environment.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for S&P Global, providing a deeper understanding of the company's financial health and market position.
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