MSCI Earnings: Sales Slowdown Drags Down Stock

MSCI reported an operating miss in the first quarter. While adjusted earnings per share of $3.52 beat the FactSet consensus estimate of $3.45, this was due to an unusually low tax rate. Revenue and adjusted EBITDA missed consensus estimates by 1% and 2%, respectively. The big disappointment was net new recurring sales, which were weak across multiple segments. This weakness was not just attributable to the merger between UBS and Credit Suisse. We will maintain our wide moat rating, but we are reducing our fair value estimate to $460 per share from $480 as we slow our near-term sales growth projections, partially offset by higher asset-based fees from market appreciation. We regard the stock as roughly fair valued following its decline after the earnings report.