Analyst Note| Rajiv Bhatia, CFA |
Moody's reported a big quarter with revenue of $1.60 billion, easily topping the FactSet consensus of $1.43 billion. Adjusted EPS of $4.06 was 44% above the consensus of $2.82. The strength was driven by higher ratings revenue, particularly in leveraged loans and high-yield bonds. Though a strong quarter, Moody’s only modestly raised its revenue outlook and we believe this disappointed investors. We will maintain our wide-moat rating and $284 fair value estimate as increases to our operating forecast are offset by higher tax rates in 2022 and beyond to reflect the possibility of higher corporate taxes.