Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 4 Jun, 25 | MCO | Buy | USD 486.39 | USD 512.0 | USD 540.0 | 50 days | Closed |
5.27%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Moody's Corporation operates as an integrated risk assessment firm worldwide. It operates in two segments, Moody's Investors Service and Moody's Analytics. The Moody's Investors Service segment publishes credit ratings and provides assessment services on various debt obligations, programs and facilities, and entities that issue such obligations, such as various corporate, financial institution, and governmental obligations, as well as and structured finance securities. Its ratings are disseminated through press releases to the public through electronic media, including the internet and real-time information systems used by securities traders and investors. The Moody's Analytics segment develops a range of products and services that support the risk management activities of institutional participants in financial markets; and offers subscription based research, data, and analytical products comprising credit ratings, credit research, quantitative credit scores and other analytical tools, economic research and forecasts, business intelligence and company information products, commercial real estate data and analytical tools, and learning solutions. It also offers offshore research and analytic services to the global financial and corporate sectors; and risk management software solutions, as well as related risk management advisory engagements services. The company was formerly known as Dun and Bradstreet Company and changed its name to Moody's Corporation in September 2000. Moody's Corporation was founded in 1900 and is headquartered in New York, New York.
Operating Margin Expansion: Operating margin improved by 700 basis points, rising from 32% in Q1 FY24 to 39% in Q1 FY25
Revenue Growth: Total revenue increased by 18%, rising from USD 1.62 billion in Q1 FY24 to USD 1.90 billion in Q1 FY25
Revenue Dependence on MIS Cyclicality: A significant portion of revenue growth came from MIS, which rose 31% year-over-year. This reliance on debt issuance activity makes results sensitive to market volatility
Slower Growth in Moody’s Analytics: Revenue growth in MA was modest at 5%, increasing only from USD 774 million in Q1 FY24 to USD 813 million in Q1 FY25, compared to the stronger 31% growth in MIS
Moody’s faces a key investment risk due to its heavy reliance on debt issuance cycles within the Moody’s Investors Service segment, exposing the company to potential earnings volatility during periods of reduced market activity
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 486.39 | 445.0 | 512.0 | 540.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Revenue Growth: Moody’s Corporation reported significant revenue growth in the first quarter of fiscal year 2025. Total revenue reached USD 1.90 billion, reflecting an 18% increase compared to the USD 1.62 billion recorded in the same quarter of fiscal year 2024. This growth was driven by strong performance across both Moody’s Investors Service (MIS) and Moody’s Analytics (MA).
Segment Performance – Moody’s Investors Service (MIS): The MIS segment delivered robust results, with revenue rising by 31% year-over-year to USD 1.09 billion in Q1 FY25 from USD 828 million in Q1 FY24. The increase was fueled by higher issuance activity across corporate finance and structured finance markets, supported by favorable credit conditions and increased refinancing demand.
Segment Performance – Moody’s Analytics (MA): Moody’s Analytics also contributed positively, generating USD 813 million in Q1 FY25, representing a 5% increase compared to USD 774 million in Q1 FY24. Growth in this segment was supported by demand for risk management solutions, data analytics, and compliance products. However, the pace of growth was relatively modest compared to the MIS division.
Profitability and Margins: Operating income rose significantly to USD 737 million in Q1 FY25, compared to USD 523 million in Q1 FY24, reflecting an improvement in operating leverage. The operating margin expanded from 32% in Q1 FY24 to 39% in Q1 FY25, supported by revenue growth in MIS and disciplined cost management across the organization.
Earnings Performance: Diluted earnings per share (EPS) improved substantially to USD 3.72 in Q1 FY25, up from USD 2.99 in Q1 FY24, marking a 24% increase. Adjusted diluted EPS followed a similar trajectory, climbing to USD 3.37 in Q1 FY25 from USD 2.93 in Q1 FY24, driven by higher profitability and efficiency gains.
Balance Sheet and Cash Flow: Moody’s maintained a strong balance sheet position, ending the quarter with solid liquidity and robust cash flow generation. Free cash flow stood at USD 602 million in Q1 FY25, a sharp increase from USD 229 million in Q1 FY24, providing flexibility for continued investments, debt reduction, and shareholder returns.
Outlook: The company remains optimistic about fiscal year 2025, guided by strong momentum in debt issuance activity, increasing demand for analytics, and a favorable operating environment. Moody’s expects to sustain revenue growth, margin expansion, and consistent shareholder value creation, supported by its diversified business model.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Moody's Corporation (NYSE: MCO) at the current market price of 486.39, as on June 04, 2025 at 10:30 am PDT.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Financial Services Industry: Financial Data & Stock Exchanges
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| MCO Moodys Corporation |
5.48 1.11% | 498.48 | 47.15 | 34.13 | 12.22 | 21.93 | 13.13 | 30.23 |
| SPGI S&P Global Inc |
10.72 2.14% | 510.58 | 56.69 | 29.76 | 11.11 | 3.83 | 11.88 | 29.36 |
| CME CME Group Inc |
0.47 0.17% | 273.42 | 25.13 | 22.62 | 14.28 | 3.02 | 14.28 | 17.43 |
| ICE Intercontinental Exchange Inc |
1.03 0.64% | 161.08 | 28.62 | 21.79 | 9.36 | 2.78 | 9.72 | 19.58 |
| LNSTY London Stock Exchange Ltd ADR |
0.83 2.89% | 29.57 | 79.08 | 25.58 | 7.82 | 2.09 | 9.11 | 20.85 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is Jun 04,2025. The reference data in this report has been partly sourced from REFINITIV
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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