Moody's (MCO) Lowers Revenue Guidance Amid Coronavirus Fears
Zacks Investment Research | Mar 11, 2020 09:51PM ET
The outlook for Moody’s Investors Service, a rating arm of Moody’s Corporation (NYSE:MCO) , full-year 2020 revenues has been changed. CEO Raymond McDaniel said that the company now expects the top line to grow in low-single digits, down from mid-single digits mentioned previously.
The ratings agency reaffirmed its yearly earnings per share outlook at $9.10-9.30 but now it expects it to be in the low end of the range.
Shares of Moody’s have declined almost 7% post the announcement of the dismal outlook.
The key reason behind the dismal outlook is the impact of coronavirus outbreak on the global economy. The company has taken into consideration factors such as interest rates, foreign currency exchange rates, business confidence and investment spending, M&A activities, and consumer borrowing. Moody’s believes that the above-mentioned factors can be affected by the coronavirus scare.
"We will continue to monitor and proactively manage our response to the situation as we work to meet stakeholder expectations," said McDaniel.
Last week, the Federal Reserve cut interest rates by half a percentage point. Travel restrictions, business shutdowns and other measures taken to curb the virus spread in China (the world’s second-largest economy) are likely to hurt the global economy.
Recently, the ratings arm of Moody’s projected that the G-20 countries are expected to grow 2.1% in 2020, i.e. 30 basis points lower than its previously mentioned figure, as the consistent coronavirus outbreak is resulting in simultaneous supply and demand shocks.
Shares of the company have lost 0.5% over the past six months compared with a 22.8% decline of the Zacks Investment Research
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