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.
