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Moody's Corporation (MCO) is a global risk assessment company that provides credit ratings, research, data, and analytics for businesses, governments, and investors. Its services help clients understand credit quality and manage financial risk. The company is headquartered in New York and serves customers across many industries worldwide. It has a market capitalization of $78.46 billion.
Moody’s stock has been under pressure amid concerns that artificial intelligence (AI) can replace financial services businesses, as well as macroeconomic factors. Over the past 52 weeks, the stock has declined 4.8%, and it is down 12.1% year-to-date (YTD). The company’s shares had reached an all-time high of $546.88 on Jan. 15, but are down 17.9% from that level.
On the other hand, the broader S&P 500 Index ($SPX) has gained 27.9% and 9.2% over the same periods, respectively, indicating that the stock has underperformed the broader market over these periods. Next, we compare the stock with its own sector. The State Street Financial Select Sector SPDR ETF (XLF) has increased 3.4% over the past 52 weeks but declined 5.2% YTD, exhibiting the same trend.
In February, Moody’s CEO Rob Fauber reassured investors that AI is not that big a threat, as the company has built a complex ecosystem of commercial agreements and IP rights based on its longstanding business.
Moody’s reported better-than-expected Q1 results, as the Moody’s Investors Service (MIS) segment reported an 8% year-over-year (YOY) growth in its revenues to a record $1.15 billion, on over $2 trillion in rated issuance. In the Moody’s Analytics (MA) segment, ARR grew at 8% to $3.61 billion. The company also brought decision-grade intelligence to Microsoft AI solutions through a dedicated Moody’s agent in Microsoft 365 Copilot.
For the current quarter, Wall Street analysts expect Moody’s EPS to increase 17.7% YOY to $4.19 on a diluted basis. EPS is expected to increase 11.7% annually to $16.69 for fiscal 2026, followed by a 10.4% improvement to $18.43 in fiscal 2027. The company has a solid record of topping consensus estimates in each of the four trailing quarters.
Among the 24 Wall Street analysts covering Moody’s stock, the consensus is a “Moderate Buy.” That’s based on 16 “Strong Buy” ratings, one “Moderate Buy,” and seven “Holds.” The ratings configuration has stayed consistent over the past three months.
Last month, Wells Fargo analyst Jason Haas maintained Moody’s rating at “Overweight,” while raising the price target to $590 from $560, reflecting cautious optimism about the company’s prospects.
Moody’s mean price target of $537.95 indicates a 19.8% upside over current market prices. Moreover, the Street-high price target of $610 implies a potential upside of 35.8%.
