Moody’s Earnings: Analytics Solid, Ratings Grows Against Easy Comps but Ratings Outlook Lowered

Moody’s reported a decent third quarter. Revenue of $1.47 billion was a touch higher than the FactSet consensus estimate of $1.46 billion while adjusted EBITDA of $657 million came in below the consensus estimate of $676 million. We attribute this and the positive market reaction to strong results in the firm’s lower margin but heavily subscription-based analytics segment. Constant currency Moody’s Analytics revenue grew 11% in the quarter, an uptick from 10% in the second quarter. We will maintain our wide moat rating and $325 fair value estimate on Moody’s shares. We regard shares as being roughly fairly valued.