Analyst Note| Rajiv Bhatia |
Wide-moat Moody’s reported strong third-quarter financial results. Revenue for the quarter was $1.36 billion, meaningfully above the FactSet consensus of $1.22 billion. Strong revenue and minimal expense growth meant that the firm’s adjusted EPS of $2.69 handily beat the consensus estimate of $2.09. Moody’s ratings segment was the star of the quarter, as the firm is benefiting from strong issuance volumes and pricing. Transaction ratings revenue grew 15% while non-transaction ratings revenue grew 3%. Moody’s also tweaked its full-year 2020 outlook higher but acknowledged issuance headwinds could materialize in 2021. As a result of the strong quarter, we intend to increase our fair value estimate to $240 from $235.