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Valued at a market cap of $84.9 billion, Moody's Corporation (MCO) is a leading integrated risk assessment firm. The New York-based company provides credit ratings, research, data and analytics tools, software solutions, and risk management services to banks and other financial institutions.
Shares of this credit rating giant have outpaced the broader market over the past 52 weeks. MCO has soared 13.7% over this time frame, while the broader S&P 500 Index ($SPX) has gained 10.1%. Meanwhile, on a YTD basis, the stock is down marginally, fairly in line with the broader market.
However, narrowing the focus, MCO has lagged behind the iShares U.S. Broker-Dealers & Securities Exchanges ETF’s (IAI) 29% uptick over the past 52 weeks and 6.7% return on a YTD basis.
On Apr. 22, shares of MCO surged 4% after its better-than-expected Q1 earnings release. The company posted revenue of $1.9 billion, which grew 7.7% from the year-ago quarter and exceeded the consensus estimates by 2.1%. Moreover, on the earnings front, its adjusted EPS advanced 13.6% year-over-year to $3.83 and came in 7.6% above Wall Street expectations.
The strong performance was driven by solid revenue growth across both segments, with a record quarter for its ratings franchise. A 100 basis-point improvement in its adjusted operating margin, demonstrating the company’s operational leverage and disciplined approach to expense management further supported profitability. Considering market volatility, MCO widened its fiscal 2025 guidance and now expects adjusted EPS to range between $13.25 and $14, representing 9% growth from fiscal 2024.
For the current fiscal year, ending in December, analysts expect MCO’s EPS to grow 9.4% year over year to $13.64. The company’s earnings surprise history is promising. It topped the consensus estimates in each of the last four quarters.
Among the 24 analysts covering the stock, the consensus rating is a “Moderate Buy” which is based on 12 “Strong Buy,” one “Moderate Buy,” 10 “Hold,” and one “Strong Sell” rating.
This configuration is slightly more bullish than two months ago, with 11 analysts suggesting a “Strong Buy” rating.
On May 19, BofA maintained a “Buy” rating on MCO and raised its price target to $540, which indicates a 14.5% potential upside from the current levels.
The mean price target of $508.90 represents a 7.9% premium from MCO’s current price levels, while the Street-high price target of $572 suggests an upside potential of 21.2%.
