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MSCI Inc (MSCI)
:MSCI
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MSCI
(NYSE:MSCI)70Outperform
Positive Factors
Market Sentiment
Global new fund formation has accelerated, and positive momentum is expected to continue due to a broadening of stock returns beyond large cap tech.
Revenue Growth
There is a long runway for continued above-peer revenue and EPS growth.
Negative Factors
Subscription Demand
If the market environment remains challenging and client budgets do not improve, there is a risk of lower demand for MSCI’s subscription-based products.
MSCI (MSCI) vs. S&P 500 (SPY)
Market Cap
$44.08B
Dividend Yield1.16%
Average Volume (3M)611.71K
Price to Earnings (P/E)40.4
Beta (1Y)0.89
Revenue Growth12.94%
EPS Growth-2.54%
CountryUS
Employees6,132
SectorFinancial
Sector Strength93
IndustryCapital Markets
Share Statistics
EPS (TTM)14.05
Shares Outstanding77,652,000
10 Day Avg. Volume587,323
30 Day Avg. Volume611,705
Financial Highlights & Ratios
PEG Ratio1.52
Price to Book (P/B)N/A
Price to Sales (P/S)15.43
Price to Cash Flow (P/CF)25.60
P/FCF Ratio25.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$681.56Price Target Upside18.95% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
MSCI Business Overview & Revenue Model
Company DescriptionMSCI Inc. provides investment decision support tools and services for the global investment community. Its offerings include indexes, Environmental, Social and Governance research and ratings, portfolio construction and risk management products and services, and real estate research, reporting and benchmarking.
How the Company Makes MoneyMSCI Inc. generates revenue primarily through its index, analytics, and ESG (Environmental, Social, and Governance) research products. The company's index segment earns money by licensing its indices to asset managers who use them to create mutual funds, ETFs, and other investment products. MSCI also charges subscription fees for its analytics and risk management tools, which help clients assess and manage investment risk. Additionally, the ESG segment contributes to revenue by providing research and ratings that help investors incorporate sustainability into their investment processes. Key partnerships with financial institutions and asset managers enhance MSCI's revenue through collaborative product development and distribution agreements.
MSCI Financial Statement Overview
Summary
MSCI exhibits strong profitability and cash flow management with impressive revenue and profit margins. However, negative equity poses a significant risk, indicating high leverage and potential financial instability.Income Statement
MSCI demonstrates robust financial performance with a consistent revenue growth trajectory over the years. The TTM data shows a gross profit margin of 78.9%, indicating strong cost management. The net profit margin of 38.8% reflects high profitability. Revenue growth rate of 12.9% (TTM vs. previous year) is impressive, alongside an EBIT margin of 53.7% and an EBITDA margin of 59.2%, showcasing excellent operational efficiency. However, the decline in net income from the previous year suggests potential areas for improvement.85
Very Positive
Balance Sheet
The balance sheet highlights a significant challenge with negative stockholders' equity, indicating potential financial instability. The debt-to-equity ratio cannot be calculated accurately due to negative equity, posing a risk. Despite this, the company maintains high returns, with ROE being irrelevant due to negative equity. Equity ratio is also negative, suggesting high leverage and potential risk in the long term.60
Neutral
Cash Flow
MSCI shows strong cash flow management with a healthy operating cash flow of $1.50 billion in TTM. The free cash flow growth rate of 24.5% from the previous year indicates robust cash generation capabilities. The operating cash flow to net income ratio of 1.35 and free cash flow to net income ratio of 1.28 in TTM show effective cash conversion. However, significant financing cash outflows highlight potential challenges in managing debt or returning capital to shareholders.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.86B | 2.53B | 2.25B | 2.04B | 1.70B | Gross Profit |
| 2.34B | 2.08B | 1.84B | 1.68B | 1.40B | EBIT |
| 1.53B | 1.38B | 1.21B | 1.07B | 884.76M | EBITDA |
| 1.75B | 1.71B | 1.36B | 1.15B | 953.34M | Net Income Common Stockholders |
| 1.11B | 1.15B | 870.57M | 725.98M | 601.82M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 405.85M | 457.81M | 993.56M | 1.42B | 1.30B | Total Assets |
| 5.45B | 5.52B | 5.00B | 5.51B | 4.20B | Total Debt |
| 4.63B | 4.63B | 4.64B | 4.31B | 3.52B | Net Debt |
| 4.23B | 4.17B | 3.65B | 2.89B | 2.22B | Total Liabilities |
| 6.39B | 6.26B | 6.01B | 5.67B | 4.64B | Stockholders Equity |
| -940.00M | -739.76M | -1.01B | -163.47M | -443.23M |
| Cash Flow | Free Cash Flow | |||
| 1.47B | 1.15B | 1.02B | 883.27M | 760.13M | Operating Cash Flow |
| 1.50B | 1.24B | 1.10B | 936.07M | 811.11M | Investing Cash Flow |
| -144.25M | -819.38M | -79.33M | -1.04B | -241.79M | Financing Cash Flow |
| -1.40B | -953.93M | -1.43B | 229.50M | -779.04M |
MSCI Technical Analysis
Negative
572.99
Price Trends
591.12
Negative
594.57
Negative
560.09
Positive
Market Momentum
-3.88
Negative
43.76
Neutral
39.64
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MSCI, the sentiment is Negative. The current price of 572.99 is below the 20-day moving average (MA) of 577.66, below the 50-day MA of 591.12, and above the 200-day MA of 560.09, indicating a neutral trend. The MACD of -3.88 indicates Negative momentum. The RSI at 43.76 is Neutral, neither overbought nor oversold. The STOCH value of 39.64 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MSCI.
MSCI Risk Analysis
MSCI disclosed 30 risk factors in its most recent earnings report. MSCI reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
MSCI Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $86.63B | 42.73 | 59.80% | 0.72% | 19.81% | 28.97% | |
78 Outperform | $159.07B | 41.85 | 11.44% | 0.71% | 13.68% | 49.90% | |
77 Outperform | $97.59B | 35.52 | 10.32% | 1.06% | 15.32% | 14.02% | |
77 Outperform | $196.32B | 15.32 | 13.16% | 2.98% | 9.17% | 53.77% | |
75 Outperform | $147.77B | 22.66 | 14.67% | 2.14% | 12.15% | 15.17% | |
70 Outperform | $44.08B | 40.41 | -117.99% | 1.16% | 12.94% | -2.54% | |
64 Neutral | $14.34B | 10.61 | 9.28% | 4.07% | 18.04% | -9.54% |
* Financial Sector Average
Performance Comparison
MSCI
MSCI
572.99
29.97
5.52%
BLK
BlackRock
968.14
152.07
18.63%
ICE
Intercontinental Exchange
171.61
33.88
24.60%
SPGI
S&P Global
522.90
99.94
23.63%
MCO
Moody's
482.18
96.08
24.88%
MS
Morgan Stanley
123.75
40.84
49.26%
MSCI Earnings Call Summary
Earnings Call Date: Jan 29, 2025 | % Change Since: -8.52% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Positive
The earnings call highlighted MSCI's strong financial performance with significant growth in revenue, cash flow, and client segments. While challenges in real assets and pressures in Europe were noted, the company's strategic wins and strong ETF inflows indicate positive momentum. The pricing environment remains moderate, but the company's product innovations and market leadership position it well for future growth.Highlights
Strong Financial Performance in 2024
MSCI achieved organic revenue growth of almost 10%, adjusted earnings per share growth of 12.4%, and free cash flow growth of 21%. The company also repurchased $810 million worth of MSCI shares for the full year.
Record ETF Cash Inflows
The highest quarterly cash inflows into equity ETFs linked to MSCI indices since 2021, totaling more than $48 billion, were reported in Q4.
Growth in Client Segments
The company achieved firm-wide subscription run rate growth of 15% with hedge funds and 12% with wealth managers, excluding FX.
Significant Wins in Fixed Income
MSCI completed a large fixed income portfolio management analytics deal with a U.S.-based asset manager, displacing a major incumbent provider.
Strong Subscription Run Rate Growth
In the wealth segment, MSCI achieved 12% subscription run rate growth, and 31% increase in direct indexing AUM based on MSCI indices.
Lowlights
Challenges in Real Assets
MSCI faced large cancels related to client events and vendor consolidation, particularly among developers, brokers, and agents in the real assets segment.
Lingering Pressures in Europe
There are continued pressures on active managers in Europe, impacting sales and cancels.
Moderate Pricing Environment
The contribution from price increases to sales was slightly less than in 2023, requiring moderation in certain areas.
Company Guidance
During the MSCI Fourth Quarter 2024 Earnings Conference Call, the company reported strong financial metrics, including a nearly 10% organic revenue growth, a 12.4% increase in adjusted earnings per share, and a 21% rise in free cash flow for the full year. MSCI also repurchased $810 million worth of shares over the year. The fourth quarter saw organic subscription run rate growth of 8% excluding FX headwinds, asset-based fee run rate growth of 15%, and a retention rate of 93%. The company highlighted significant client engagement, particularly with wealth managers and hedge funds, achieving a 15% and 12% firmwide subscription run rate growth respectively. Additionally, MSCI noted strong performance in its fixed income products, with a 15% run rate growth across all product lines, and emphasized the growing demand for ESG and climate-related investment products. The company remains optimistic about leveraging its data, models, and technology to drive future growth across various client segments and market cycles.MSCI Corporate Events
Executive/Board Changes
Wayne Edmunds Retires from MSCI Board of Directors
Neutral
Feb 25, 2025
On February 23, 2025, Wayne Edmunds announced his retirement from MSCI Inc.’s Board of Directors, where he has served since 2015. His departure is not due to any disagreements with the company’s management or policies. Following his retirement, the Board plans to reduce its size from thirteen to twelve members.
Executive/Board ChangesBusiness Operations and Strategy
MSCI Aligns CEO Compensation with Shareholder Value
Positive
Jan 31, 2025
On January 27, 2025, MSCI Inc. approved a one-time premium-priced stock option award for CEO Henry A. Fernandez, valued at $15 million and designed to align with long-term shareholder value creation through rigorous performance-based hurdles. The award, reflecting MSCI’s commitment to a robust ‘owner-operator’ culture, underscores Fernandez’s track record of substantial shareholder return, with a 23.5% CAGR since 2007, significantly outperforming the S&P 500. Additionally, the company increased Fernandez’s annual long-term equity incentive compensation from $11.6 million to $14.6 million, further aligning executive compensation with shareholder interests. This move is part of MSCI’s broader strategy to incentivize exceptional shareholder returns while adhering to competitive market standards and maintaining a pay-for-performance philosophy.
Executive/Board Changes
MSCI Strengthens Board with Tech Expertise Appointment
Positive
Dec 17, 2024
MSCI Inc. has appointed June Yang, a seasoned technology executive with significant expertise in cloud computing and artificial intelligence, as an independent director on its Board of Directors. This appointment is expected to enhance MSCI’s strategic vision and innovation capabilities, as Yang’s experience in advanced AI and cloud infrastructure aligns with MSCI’s commitment to delivering enhanced tools for the global investment community.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.