On Monday, Oppenheimer adjusted its price target for S&P Global (NYSE:SPGI) shares, increasing it slightly from $482.00 to $486.00. The firm retains an Outperform rating on the company's stock.
The revision follows an enhanced second-quarter earnings per share (EPS) forecast, which has been raised by 6% to $3.67, up from the previous estimate of $3.46. This adjustment is largely due to an anticipated increase in revenue from the Ratings segment, which is expected to exceed consensus estimates by approximately 6%.
In addition to the near-term EPS forecast increase, Oppenheimer has also updated its EPS estimates for the years 2024 and 2025. The new projections are $14.34 and $16.19 respectively, marking an increase from the former estimates of $14.16 for 2024 and $16.05 for 2025. The price target lift to $486 is predicated on a 30 times multiple of the firm's 2025 earnings estimate.
The valuation of S&P Global becomes more compelling as the stock's relative multiple currently sits below its five-year average. The recent executive changes at the company, with CEO Doug Peterson retiring and Martina Cheung stepping in as the new president and CEO, were unexpected and are believed to potentially influence the company's strategic direction, particularly concerning divestitures and acquisitions.
As investors anticipate the upcoming earnings call, focus areas are expected to include the potential new strategic direction for S&P Global under its new leadership, updates to the company's guidance and outlook for billed issuance, possible divestitures and how they might synergize with the Mobility segment, as well as opportunities in the private markets and potential acquisition targets.
In other recent news, S&P Global has declared a third-quarter cash dividend of $0.91 per share, maintaining its tradition of consistent dividend payments dating back to 1937.
The company has also made significant strides in its expansion efforts, with RBC Capital maintaining an Outperform rating due to the recent expansion of its CapIQ Pro platform and the acquisition of Visible Alpha.
In addition, S&P Global's merger with IHS Markit has broadened its market reach and product offerings, with expectations of improved subscription growth in the Market Intelligence and Indices segments.
S&P Global's recent developments also include the addition of Fixed Income data to its offerings, a move that's expected to contribute positively to its financial performance and advance its market position. Furthermore, the company's commitment to technology leadership through initiatives like GenAI is expected to support its mid-term financial goals.
Recent findings from S&P Global Mobility reveal that the average lifespan of vehicles in the U.S. has reached a new high of 12.6 years, a trend that is anticipated to boost the aftermarket and vehicle service sectors.
On the other hand, high interest rates combating inflation have led to a deceleration in electric vehicle sales growth since late 2023. Lastly, despite a strong rebound in the first quarter, S&P Global maintains a modest growth projection of 0.5% for Israel's economy in 2024, with expectations for growth to pick up to 5.0% in 2025.
InvestingPro Insights
With Oppenheimer's updated outlook on S&P Global (NYSE:SPGI), investors may find additional context through real-time data and insights from InvestingPro. S&P Global has demonstrated a robust financial performance with a revenue growth of 7.33% over the last twelve months as of Q1 2024, and an impressive gross profit margin of 67.47%. This financial health is further underscored by a P/E ratio of 42.68, which, while indicating a high earnings multiple, aligns with the company's consistent profitability and market position.
InvestingPro Tips highlight that S&P Global has not only maintained dividend payments for 54 consecutive years but has also raised its dividend for 10 consecutive years. This track record of dividend reliability and growth could be a reassuring signal for income-focused investors. Additionally, with the stock trading near its 52-week high and analysts forecasting profitability this year, the company's stable financial trajectory is evident.
For those looking to delve deeper into S&P Global's performance and strategic potential, InvestingPro offers a wealth of additional tips. By using the coupon code PRONEWS24, investors can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to more than 10 further expert insights that could help in making informed investment decisions.
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