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MSCI Off to a Strong Start to 2021 and Expects to Modestly Increase Investment Spending

Rajiv Bhatia, CFA Equity Analyst

Analyst Note

| Rajiv Bhatia, CFA |

MSCI is off to a good start in 2021 with strong first-quarter financial results. Revenue of $478 million topped the FactSet consensus of $472 million. Adjusted EBITDA of $277 million was a touch above the consensus estimate of $274 million. Adjusted earnings per share of $2.46 beat the consensus by $0.21, and we’d attribute the bulk of the earnings beat to a lower-than-expected tax rate. Retention of 96.3% was strong and improved from 95.0% in the year-ago period with improvements in Analytics and ESG & Climate. MSCI did tweak its adjusted EBITDA expense guidance higher to $795 million-$825 million from $780 million-$800 million as it continues to invest in the business, a move that makes sense in our view. Following the strong quarter, we are maintaining our wide moat rating on MSCI and expect to increase our fair value estimate to $286 from $270 per share.

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Company Profile

Business Description

MSCI describes its mission as enabling investors to build better portfolios for a better world. MSCI's largest and most profitable segment is its index segment, where it provides benchmarking to asset managers and asset owners. In addition, it boasts over $1 trillion in ETF assets linked to MSCI indexes. The MSCI Analytics segment provides portfolio management and risk management analytics software to asset managers and asset owners. MSCI's All Other segment which comprises about 10% of revenue will be broken out into ESG and climate and private assets segments in 2021. In ESG and climate, MSCI provides ESG data to the investment industry. In the private asset side, MSCI provides real restate reporting, market data, benchmarking, and analytics to investors and real estate managers.

250 Greenwich Street, 49th Floor, 7 World Trade Center
New York, NY, 10007
T +1 212 804-3900
Sector Financial Services
Industry Financial Data & Stock Exchanges
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 3,728