Moody's Corporation (NYSE:MCO) Just Reported And Analysts Have Been Lifting Their Price Targets

It's been a good week for Moody's Corporation (NYSE:MCO) shareholders, because the company has just released its latest full-year results, and the shares gained 3.7% to US$523. Moody's reported in line with analyst predictions, delivering revenues of US$7.1b and statutory earnings per share of US$11.26, suggesting the business is executing well and in line with its plan. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Moody's

After the latest results, the 19 analysts covering Moody's are now predicting revenues of US$7.60b in 2025. If met, this would reflect a modest 7.2% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to expand 12% to US$12.84. Before this earnings report, the analysts had been forecasting revenues of US$7.54b and earnings per share (EPS) of US$12.45 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target rose 5.9% to US$535, suggesting that higher earnings estimates flow through to the stock's valuation as well. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Moody's analyst has a price target of US$610 per share, while the most pessimistic values it at US$416. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Moody's' past performance and to peers in the same industry. It's clear from the latest estimates that Moody's' rate of growth is expected to accelerate meaningfully, with the forecast 7.2% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 5.0% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 5.7% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Moody's is expected to grow at about the same rate as the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Moody's' earnings potential next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Moody's. Long-term earnings power is much more important than next year's profits. We have forecasts for Moody's going out to 2027, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Moody's that you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.