On Thursday, Stifel reaffirmed its Buy rating on S&P Global (NYSE:SPGI) with a consistent price target of $540.00. The firm's analysis identified a significant uptick in billed debt issuance, observing a 50% year-over-year increase in the third quarter of 2024, surpassing initial projections of a flat growth rate. This unexpected performance raises questions about whether it stems from a shift in demand within the year, a forward pull from future periods, or a genuine enhancement in the underlying market conditions.
Stifel's current stance leans towards a combination of some fundamental market improvement in 2024 along with a shift of in-year demand from the fourth quarter to the third. However, the firm also notes potential challenges ahead, citing recent interest rate hikes since mid-September and the forthcoming presidential election as possible obstacles for the fourth-quarter 2024 debt issuance market.
In light of the stronger-than-anticipated third-quarter performance, Stifel has adjusted its forecasts for S&P Global. The firm has elevated its earnings per share (EPS) estimates for the third quarter of 2024 from $3.26 to $3.73 and for the full year from $14.55 to $14.97. These revised figures reflect the firm's expectation of continued strength in the market as evidenced by the recent data.
In other recent news, S&P Global has experienced a significant increase in total revenue, driven primarily by a 60% surge in transaction revenue from the ratings division. The company's subscription products also saw an 8% year-over-year increase. This strong financial performance prompted Evercore ISI, Morgan Stanley, Goldman Sachs, and BMO Capital to raise their price targets for S&P Global.
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. Alongside the Ratings business, S&P Global's non-Ratings divisions, specifically the Indices and Commodity Insights segments, are also consistently achieving robust high-single-digit revenue growth.
InvestingPro Insights
S&P Global's recent performance aligns with several key metrics and insights from InvestingPro. The company's market cap stands at an impressive $161.08 billion, reflecting its significant position in the financial information and analytics sector. This valuation is supported by strong financial performance, with revenue growing by 10.09% over the last twelve months to $13.28 billion.
InvestingPro Tips highlight S&P Global's financial strength and market position. The company has maintained dividend payments for 54 consecutive years and has raised its dividend for 11 consecutive years, demonstrating a commitment to shareholder returns that aligns with Stifel's positive outlook. Additionally, S&P Global boasts a perfect Piotroski Score of 9, indicating robust financial health and operational efficiency.
The company's P/E ratio of 48.82 suggests that investors are willing to pay a premium for its shares, possibly due to its strong market position and growth prospects. This high valuation multiple is consistent with Stifel's Buy rating and the optimistic earnings forecasts.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips that could provide further insights into S&P Global's investment potential.
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