The Fidelity MSCI Industrials Index ETF (FIDU) is a passively managed exchange traded fund offering broad exposure to the Industrials sector. It boasts low costs, transparency, and a strong track record, making it an attractive choice for long-term investors seeking diversified exposure to the sector.
MSCI, an investment research firm, reported strong first-quarter earnings on Tuesday, posting a 14.8% increase in revenue to $679.97 million. However, the company slightly missed the consensus estimate of $684.14 million. Despite missing revenue estimates, MSCI exceeded expectations with an adjusted EPS of $3.52, above the consensus of $3.45. MSCI reported growth across its major operating segments, including Index, Analytics, and ESG and Climate, driven by higher subscription revenues and asset-based fees. Index operating revenues grew by 10.2% year-over-year to $373.9 million, led by recurring subscription revenues. Analytics operating revenues increased by 11.5% to $164 million, primarily due to higher subscription revenues from Equity and Multi-Asset Class Analytics products. ESG and Climate operating revenues grew by 16.1% to $77.9 million, driven by solid growth in Ratings, Screening, and Climate products. MSCI’s Chairman and CEO, Henry A. Fernandez, acknowledged elevated cancels due to a concentration of client events, including a major merger among banking clients. The company expects these cancels to subside. For fiscal year 2024, MSCI maintained its operating expense guidance of $1.30 billion to $1.34 billion, capex of $95 million to $105 million, and free cash flow of $1.225 billion to $1.285 billion. MSCI shares fell by 13.4% to close at $446.00 on Tuesday. Several analysts adjusted their price targets for MSCI after the earnings announcement. Deutsche Bank analyst Faiza Alwy upgraded the stock from Hold to Buy while lowering the price target from $613 to $569. Morgan Stanley analyst Toni Kaplan maintained an Overweight rating but reduced the price target from $671 to $615.
MSCI’s stock price experienced a significant drop of 13.2% in late morning trading on Tuesday following the release of its first-quarter 2024 financial results. The company’s profitability was impacted by higher expenses, which overshadowed higher-than-expected adjusted EPS. Operating revenue slightly missed analyst estimates, while total operating expenses surged by 22.7% year-over-year. Despite these challenges, MSCI reported growth in its total run rate and recurring subscription run rate. The company also reaffirmed its outlook for fiscal year 2024.
