MSCI stock rating reiterated at Outperform by RBC despite tough comps
Investing.com
Published Jul 01, 2025 12:08PM ET
Investing.com - RBC Capital has reiterated an Outperform rating on MSCI Inc . (NYSE:MSCI) with a price target of $675.00, despite expectations of lower subscription sales in the near term. According to InvestingPro data, MSCI trades at a P/E ratio of 39.8x and maintains strong financials with an 82% gross profit margin. The company appears overvalued based on InvestingPro's Fair Value analysis.
RBC estimates net new subscription bookings of $46 million, falling below the consensus estimate of $51 million, citing tough year-over-year comparisons following Moody's ESG deal and a large hedge fund deal in the previous year.
The firm is monitoring retention issues related to the merger of two European asset managers, which could impact MSCI's subscription business performance.
On a positive note, RBC points out that the rally in international equities should benefit MSCI's assets under management (AUM) growth in the second quarter of 2025, potentially driving revenue and earnings per share beats.
RBC expects MSCI to maintain its fiscal year 2025 EBITDA expense guidance of $1,220 million to $1,250 million and free cash flow guidance of $1.4 billion to $1.46 billion, while predicting fund formation activity will increase in the second half of 2025 and fiscal year 2026. The company's current EBITDA stands at $1.69 billion, demonstrating its strong market position and operational efficiency.
In other recent news, MSCI Inc. reported its first-quarter 2025 earnings, surpassing analysts' expectations with an earnings per share (EPS) of $4.00, compared to the forecasted $3.93. The company reported organic revenue growth of 10%, with total revenue slightly above forecasts at $745.83 million. Fitch Ratings affirmed MSCI's Long-Term Issuer Default Rating at 'BBB-' with a Stable Outlook, citing the company's strong operating performance and high EBITDA margins. UBS maintained a Buy rating on MSCI stock, highlighting optimism in asset allocation trends and client confidence as drivers for future growth. Additionally, MSCI shareholders approved executive compensation and a new incentive plan during the company's annual stockholders meeting. In market classification news, MSCI extended its consultation on potentially reclassifying Bulgaria's market status, while also noting improvements in Greece's market accessibility. The company continues to evaluate market accessibility reforms in South Korea. These developments reflect MSCI's ongoing efforts to adapt to global market conditions and maintain its strategic initiatives.
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