Weak Bond Issuance Continues to Weigh on Moody's Results, but Modest Ratings Revenue Growth in 2023

As expected, revenue declined meaningfully for wide-moat Moody’s amid soft bond issuance impacting the ratings business. Organic constant currency revenue declined 13% to $1.29 billion as ratings revenue declined 32%. Moody’s Analytics acted as a partial buffer to the vicissitudes of the ratings business with steady revenue growth and operating margin expansion. As we tweak our model, we are increasing our fair value estimate to $315 from $290 to reflect a bond issuance rebound, solid results at Moody’s Analytics, and time value of money.