MSCI Management Is Conservative, Analyst Sees Strong Momentum In 2025

RBC Capital Markets analyst Ashish Sabadra reiterated the Outperform rating on MSCI Inc. MSCI with a price forecast of $675.

Yesterday, the firm reported fourth-quarter revenue growth of 7.7% year-on-year to $743.5 million, missing the analyst consensus estimate of $744.8 million. The adjusted EPS of $4.18 beat the analyst consensus estimate of $3.95. The total run rate on December 31, 2024, rose 8.8% Y/Y to $2.92 billion. 

The analyst notes that the stock is facing pressure because MSCI expects some retention issues, challenges with European active asset managers, and hasn’t clarified pricing increases for 2025.

However, per Sabadra, MSCI’s management is being conservative. The analyst anticipates that net new subscription growth will accelerate to double digits in 2025, which could drive the stock higher.

The improvement in the sales pipeline is attributed to increased confidence from higher market and AUM levels, leading to higher revenues for asset managers.

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This has positively influenced their budgets and purchasing behaviors, resulting in shorter sales cycles, although geographic and client segment variations exist.

Sabadra sees this trend indicating solid growth potential for FY25 and beyond. The analyst notes that MSCI reported higher cancellations in real assets, continuing pressure from client events and budget constraints.

In the fourth quarter, the analyst highlighted the impact of a large down sale from a pressured client, along with softness in brokers and agents due to vendor consolidation, leading to weakness in data and property intelligence products.

However, retention rates with asset managers remain strong at around 94%, the analyst highlights.

MSCI is encouraged by early signs of capital re-entering the space, especially with institutional money returning to the Americas and Europe, which could signal increased future activity as equity markets remain strong, Sabadra notes.

Price Action: MSCI shares are trading lower by 0.17% to $592.03 at last check Thursday.

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