MCO changes
Pick any two versions below to diff them.
- Price
- $491.05 → $514.93(+4.9%)
- Discount category
- Below intrinsic value → Close to intrinsic value
- Thesis
- The market discounts Moody's for two reasons. First, investors fear that AI will make data, research and analytics cheaper to produce, which can hurt Moody's Analytics. In early February 2026, a sell-off spread from software companies to financial data firms, and Moody's stock fell more than 17% in 2026 before its February 18 report. Second, rating revenue depends on new debt issuance, which was very strong in Q2 2026, when MIS transaction revenue grew 34%. Investors ask whether this level can last after the Federal Reserve raised rates in September 2026. In Q3 2026, MIS revenue fell 1% from a record quarter a year earlier, as high-yield and leveraged loan issuance fell. removed: In October 2026, Morgan Stanley, BMO and JPMorgan cut their price targets before the Q3 report. For the gap to close, MA ARR growth, which slowed to 8% in Q3 2026, must return to about 9% or more, which shows that AI does not take its customers. MIS revenue must hold up when issuance growth slows, and Moody's must keep its adjusted operating margin within its 2026 guidance of 52% to 53%. The next evidence comes with the full-year 2026 report and the 2027 guidance in early 2027. If MA growth holds and issuance stays healthy, the gap can close over the next four to six quarters. If AI tools take share from MA or a credit downturn cuts issuance, the discount can last.
- Recent events
- Oct 21, 2026: Moody's reported Q3 2026 results. Revenue grew 1% to $2.02 billion, or 3% on an organic constant currency basis, and adjusted EPS grew 6% to $4.14. MIS revenue fell 1% to $1.09 billion against a record Q3 2025. Investment grade revenue grew 18%, but high-yield revenue fell 40% and leveraged loan revenue fell 27%. MA revenue grew 8% on an organic constant currency basis, and MA ARR grew 8% to $3.69 billion. The adjusted operating margin was 52.6%. Moody's kept its 2026 guidance, with adjusted EPS of $16.50 to $17.00. It bought back $2.6 billion of shares in the first nine months of 2026. removed: Oct 14, 2026: JPMorgan cut its price target to $555 from $570 and kept an Overweight rating. A day earlier, BMO cut its target to $490 from $515. Oct 7, 2026: Morgan Stanley cut its price target to $470 from $512 and kept a Hold rating. Sep 30, 2026: Moody's said that it will release Q3 2026 results before the NYSE opens on October 21, 2026. Aug 11, 2026: Moody's elected Keith Demmings, the CEO of Assurant, to its board, effective November 1, 2026. Jul 22, 2026: Moody's reported Q2 2026 results. Revenue grew 15% to $2.19 billion, and adjusted EPS grew 31% to $4.68. MIS revenue grew 25%, and MA ARR grew 9% to $3.7 billion. Moody's raised its 2026 buyback plan to up to $3.0 billion and narrowed its 2026 adjusted EPS guidance to $16.50 to $17.00. In Q2 2026, it sold its MA Regulatory Solutions business for a pre-tax gain of $179 million, and in July 2026 it expanded its restructuring program. Apr 22, 2026: Moody's reported Q1 2026 results. Revenue grew 8% to $2.1 billion, and adjusted EPS grew 13%. It raised its 2026 buyback plan to about $2.5 billion and named Christina Kosmowski as CEO of Moody's Analytics, effective June 2026.