Morgan Stanley Provides Color On IHS Downgrade

Morgan Stanley has downgraded IHS Inc. IHS and is removing its price target. “Our estimates are largely unchanged,” Morgan Stanley writes. “IHS is one of the most attractive names in our analytics coverage with respect to organic revenue growth and margin expansion, but with the shares up ~60% y/y vs. 20% for the S&P 500, we believe this is in the valuation.” Morgan Stanley said that it expects organic growth improvement to continue and margin expansion to pick up following the roll out of Vanguard (IHS' Enterprise Resource Planning initiative), but IHS now trades at 13.9x CY11E adj. EV/EBITDA vs. peers at 13.0x. “On an unadjusted basis, which does not add back stock based comp, pension expense, etc, the stock trades at 17.2x CY11E EV/EBITDA vs. peers of 14.4x,” Morgan Stanley continues. “We can point to better opportunities for investors in the analytics space, such as Overweight-rated MSCI Inc. MSCI.” IHS Inc. currently trades at $82.26; MSCI Inc. trades at $34.76.