On Wednesday, RBC Capital Markets sustained their positive outlook on MSCI Inc . (NYSE:MSCI), maintaining an Outperform rating and a price target of $675.00. This aligns with broader analyst sentiment, as InvestingPro data shows six analysts have recently revised their earnings estimates upward for the upcoming period. With a current market capitalization of $43 billion and a P/E ratio of 39.18, MSCI trades at a premium multiple, suggesting high growth expectations. The firm’s analysts expect MSCI to uphold its FY25 free cash flow (FCF) guidance of $1.4 billion to $1.46 billion, despite a potential slowdown in asset-based fees (ABF) and net new subscription sales. They anticipate that MSCI will achieve this through stringent cost control measures, which may lead to a reduction in adjusted EBITDA expenses guidance, currently projected between $1.22 billion and $1.25 billion. The company’s strong operational efficiency is evident in its impressive 82% gross profit margin and robust EBITDA of $1.65 billion for the last twelve months.
RBC Capital analysts predict that MSCI’s net new subscription sales for the first quarter of 2025 will amount to $25 million with a retention rate of 93.9%. These figures fall short of the consensus estimates, which projected net new subscription sales of $34 million and a retention rate of 94%. The analysts attribute the lower expectations to budget tightening towards the end of the first quarter of 2025 and MSCI’s strategic pricing decisions.
The firm’s outlook implies confidence in MSCI’s ability to navigate through a challenging economic environment by implementing what they refer to as a "downturn playbook." This approach focuses on maintaining financial discipline to protect the company’s cash flow guidance despite headwinds in the market.
RBC Capital’s reiteration of the Outperform rating and price target reflects their belief in MSCI’s resilience and potential for value creation. The analysts’ comments indicate a view that MSCI is well-positioned to manage its expenses and maintain strong financial performance even in the face of softer asset-based fees and subscription sales.
MSCI has not publicly responded to RBC Capital’s expectations or provided any updates on its financial guidance as of Wednesday. Investors will be watching closely to see if the company can meet these projections and continue to deliver value amidst market uncertainties. For investors seeking deeper insights, InvestingPro offers comprehensive analysis including 8 additional ProTips and a detailed Fair Value assessment, suggesting the stock currently trades above its intrinsic value. The company’s next earnings report is scheduled for April 22, 2025, just 6 days away.
In other recent news, MSCI Inc. reported its fourth-quarter earnings, revealing an adjusted EPS of $4.18, surpassing JPMorgan (NYSE:JPM)’s estimate of $3.93, though revenues slightly missed expectations. The company’s adjusted EBITDA margins expanded by 70 basis points year-over-year to 60.8%, despite some segments not meeting projections. RBC Capital Markets maintained an Outperform rating with a $675 price target, noting a strong pipeline and potential recovery in subscription sales. Meanwhile, JPMorgan revised its price target for MSCI to $680 from $700, citing mixed fourth-quarter metrics but a positive sales environment outlook.
UBS reaffirmed its Buy rating and $700 price target, highlighting MSCI’s solid pricing power and potential asset reallocation trends favoring global investment strategies. BofA Securities initiated coverage with a Neutral rating and a $585 price target, acknowledging long-term positive trends but also noting near-term challenges across key business segments. Additionally, MSCI announced that board member Wayne Edmunds will retire at the 2025 Annual Meeting, leading to a reduction in board size from thirteen to twelve members.
These developments reflect MSCI’s ongoing efforts to navigate market dynamics and strategic shifts in its operations.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.