MSCI Inc. (NYSE: MSCI) is a worldwide investing community supplier of crucial decision support tools and solutions. Index, Analytics, ESG and Climate, and All Other - Private Assets are the company's operational segments. Its indexes are utilized in indexed product design, performance benchmarking, portfolio construction and rebalancing, and asset allocation, among other aspects of the investing process. The Analytics category includes material, apps, and services for risk management, performance attribution, and portfolio management. MSCI ESG Ratings, MSCI ESG Business Involvement Screening Research, and MSCI Climate Solutions are among the company's ESG and Climate solutions. The Real Estate and Burgiss sectors make up the company's All Other sections.
Key takeaways from Q1 FY22 (Ended March 31, 2022)
Other Key events of Q1 FY22
Balance Sheet & Liquidity Position
Exceptional Track Record of Financial Execution
Source: Company Presentation
Top 10 Shareholders: The top 10 shareholders together form around 42.02% of the total shareholding, while the top 2 constitute the maximum holding. The Vanguard Group, Inc., and BlackRock Institutional Company hold the maximum stake in the company at 10.54% and 5.08%.
Top 10 Shareholders; Source: REFINITIV, Analysis by Kalkine Group
MSCI Inc expects operating expenses for the current year 2022 to be in the range of USD 1.075 billion to USD 1.115 billion while adjusted EBITDA expense is expected in the range of USD 0.95 billion to USD 1.005 billion. Interest expense for the year is expected to be USD 162 million. Free cash flow for the year is expected to be in the range of USD 1050 million to USD 1100 million with an effective tax rate in the range of 15.5% to 18.5% for the year.
Valuation Methodology: EV/Sales Multiple Based Relative Valuation
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Over the past six months, MSCI's share price has corrected by 39.62%. The stock is currently leaning towards the lower end of its 52-week range of USD 376.41 to USD 679.85. We have valued the stock using the EV/Sales multiple-based illustrative relative valuation method and arrived at a target price of USD 455.17.
We believe that the company should trade at a premium to its peer's average as per the historical averages, given its strong competitive advantage against the peer.
Considering the strong fundamentals, robust margins, robust risk profile, positive outlook, associated risks, and current valuation, we give a "Buy" recommendation on the stock at the closing price of USD 387.40, as of May 11, 2022.
MSCI Technical Chart, Data Source: REFINITIV, Analysis by Kalkine Group
Technical Analysis Summary
* Closing price as of May 11, 2022.
Technical Indicators Defined: -
Support: A level where-in the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decisions should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.
Note 3: The report publishing date is as per the Pacific Time Zone.
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