On Monday, Oppenheimer has increased the price target for Moody's Corp (NYSE:MCO) shares to $454.00, up from the previous target of $424.00, while retaining an Outperform rating on the stock.
The firm's decision comes after adjusting the second quarter earnings per share (EPS) estimate upwards by approximately 12% to $3.06 from $2.72, citing an anticipated increase in revenue from the Ratings segment. This revised estimate suggests a potential 12% upside from the consensus forecast.
The adjustment to Moody's price target is based on a multiple of 36 times the estimated earnings for the year 2025. The new estimates for the fiscal years 2024 and 2025 EPS are now set at $10.95 and $12.61, respectively, marking an increase from the prior estimates of $10.68 and $12.46. The revised valuation reflects the market's high expectations for a rebound in issuance activity and Moody's robust competitive position.
The upcoming earnings call is expected to draw investor attention to several key areas, including an update on the company's guidance, the progress in monetizing AI products and the Moody's Research Assistant tool, the potential for issuance activity to bring forward into the first half of 2024, and the opportunities for expanding margins within Moody's Analytics division.
Moody's current valuation stands above the industry average, which is justified by its strong competitive moat and the anticipation of a recovery in issuance. As the earnings call approaches, these factors, along with the company's strategic initiatives, will be under close watch by investors and analysts alike.
In other recent news, Moody's Corporation reported a strong start to 2024, with first-quarter results showcasing a 21% increase in revenue and a significant rise in adjusted diluted earnings per share to $3.37.
RBC Capital maintained its positive outlook on Moody's, highlighting a significant increase in Corporate Finance issuance during the first quarter and a substantial 32% growth in issuances within Financial Institutions.
Stifel, a financial services firm, increased its price target of Moody's shares to $374 from $350, attributing this adjustment to Moody's solid performance in the first quarter.
BMO Capital Markets maintained its Outperform rating on Moody's shares, with a consistent price target of $420.00, following Moody's first quarter results for 2024, which exceeded expectations. The strong performance was attributed to robust debt issuance, marking the second-best revenue quarter for Moody's Investors Service.
Despite a minor deceleration in Moody's Analytics growth, the company's Annual Recurring Revenue saw a 10% increase. These are the recent developments in the company's business operations.
InvestingPro Insights
As Moody's Corp (NYSE:MCO) approaches its earnings call with high expectations for a recovery in issuance and strategic initiatives, recent data and analysis from InvestingPro provide additional context for investors. Moody's robust financial metrics underscore its strong market position, with a significant market capitalization of $76.87 billion and a solid track record of revenue growth, up 15.07% over the last twelve months as of Q1 2024. The company's gross profit margin stands impressively at 72.3%, indicating efficient operations and a strong competitive moat.
InvestingPro Tips highlight Moody's as a consistent performer, having raised its dividend for 14 consecutive years and maintained dividend payments for 27 years, reflecting a reliable return to shareholders. Additionally, analysts have revised their earnings upwards for the upcoming period, signaling confidence in the company's financial outlook. With the stock trading near its 52-week high and a P/E ratio of 45.77, investors are pricing in optimistic growth prospects. For those looking to delve deeper into Moody's financial analysis, InvestingPro offers additional tips to further inform investment decisions. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which includes access to a wealth of financial data and expert insights.
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