On Monday, an analyst from Stifel adjusted the stock price target for S&P Global (NYSE:SPGI), increasing it to $560 from the previous $540, while keeping a Buy rating on the stock. The revision follows S&P Global's robust third-quarter performance, which was notably fueled by its Ratings business, benefiting from high levels of debt issuance. The Indices business also contributed positively to the results.
The company's outlook for debt issuance has been revised upward, with expectations of a 50% growth in 2024, a significant increase from the previously anticipated 25%. This growth has been attributed not only to pull-forward activity but also to a rise in dividend recapitalizations and a surge in mergers and acquisitions, suggesting an overall improvement in the underlying market.
Stifel's analyst believes that the current market dynamics could potentially balance out the challenging comparisons that the Ratings unit may face in 2025. In light of these developments, Stifel has revised its fourth-quarter 2024 and full-year 2025 earnings estimates for S&P Global upwards.
The new price target of $560 for S&P Global is based on the same valuation methodology previously employed by Stifel. However, the firm has updated its target to reflect the current estimates and market valuations, indicating continued confidence in the company's performance.
In other recent news, S&P Global reported a 16% year-over-year increase in total revenue for the third quarter of 2024, reaching $3.6 billion. The company's ratings division significantly contributed to this growth, with transaction revenue surging over 80%. Adjusted diluted earnings per share (EPS) also experienced a 21% growth, primarily due to margin expansion and share repurchases.
Baird and BofA Securities have both updated their outlooks on S&P Global, with Baird increasing its price target to $575 and maintaining an Outperform rating, while BofA Securities adjusted its price target to $610, retaining a Buy rating on the stock. Both firms highlighted S&P Global's strong performance and potential for future earnings growth.
In addition, S&P Global has announced leadership changes, with Eric Aboaf slated to join as CFO in February 2025 and Saugata Saha set to become President of the Market Intelligence Division. Lastly, the company has raised its revenue growth forecast for 2024 to between 11.5% and 12.5%, with adjusted diluted EPS estimates ranging from $15.10 to $15.30.
InvestingPro Insights
S&P Global's strong performance and positive outlook are further supported by recent data from InvestingPro. The company's market capitalization stands at an impressive $152.24 billion, reflecting its significant position in the financial information and analytics industry.
InvestingPro Tips highlight S&P Global's financial strength and consistent performance. 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 the positive outlook mentioned in the article. Additionally, S&P Global boasts a perfect Piotroski Score of 9, indicating strong financial health across various metrics.
The company's revenue growth of 12.1% over the last twelve months and a robust 15.92% growth in the most recent quarter underscore the strong performance noted by Stifel's analyst. This growth is particularly impressive given S&P Global's size and market position.
It's worth noting that while S&P Global trades at a relatively high P/E ratio of 43.35, its PEG ratio of 0.92 suggests that the stock may still be undervalued relative to its growth prospects. This could provide additional context to Stifel's increased price target and Buy rating.
For investors seeking more comprehensive analysis, InvestingPro offers 11 additional tips for S&P Global, providing a deeper understanding of the company's financial position and market outlook.
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