On Monday, Redburn-Atlantic made a change to its rating on MSCI Inc . (NYSE:MSCI) stock, lifting it from Sell to Neutral. Accompanying the upgrade, the firm also raised the price target to $485 from the previous $405.
The adjustment comes after a period of challenges for MSCI, including a slowdown in new recurring subscription sales growth and an uptick in client cancellations, which have been headwinds for the investment case.
The analyst at Redburn-Atlantic indicated that the share price of MSCI had experienced a decline and underperformed compared to its peers. However, it is anticipated that the company's management will take measures to address these issues.
While acknowledging that MSCI may be entering a phase of slower growth, the analyst pointed out that there are several strategies management could employ to alleviate near-term earnings pressure.
In response to the potential actions by MSCI's management, Redburn-Atlantic revised its earnings per share (EPS) forecasts upward by 1% per annum for the years 2024-2027.
This reflects the analyst's expectation that management initiatives, including cost management and share repurchases, could have a positive impact on the company's financial performance.
The new 12-month price target of $485 set by Redburn-Atlantic aligns with the current trading price of MSCI's stock. The upgrade to Neutral suggests that the firm now views the valuation of MSCI shares as more reasonable when compared to its industry counterparts.
The analyst's comments underscore the belief that despite the current challenges, MSCI has the tools at its disposal to navigate through the period of slower growth and stabilize its market position.
InvestingPro Insights
As MSCI Inc. (NYSE:MSCI) navigates through a period of slower growth and market stabilization, current metrics from InvestingPro offer additional context. With a market capitalization of $38.44 billion, MSCI is trading at a P/E ratio of 33, suggesting a valuation that aligns with near-term earnings potential. The company's commitment to shareholder value is evident, having raised its dividend for 10 consecutive years, with the most recent dividend growth over the last twelve months being 15.94%. Additionally, MSCI's gross profit margin remains robust at 82.17%, reflecting efficient operations and strong pricing power.
InvestingPro Tips highlight that while some analysts have revised their earnings downwards for the upcoming period, MSCI is still expected to be profitable this year and has been profitable over the last twelve months. Moreover, the company has maintained dividend payments for 11 consecutive years, which is a testament to its financial resilience. For investors seeking a deeper dive into MSCI's performance and potential strategies, InvestingPro offers an array of additional tips, which can be explored with the use of promo code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription. As of now, there are 10 additional InvestingPro Tips available, which could provide further insights into MSCI's financial health and investment potential.
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