Assessing MSCI’s Valuation After Launching Its New Private Credit Factor Model

The launch of the new Private Credit Factor Model from MSCI (MSCI) is grabbing investor attention, and for good reason. This is not just another tool; it is a direct response to the growing demand for more transparency and better risk management in the fast-evolving world of private credit. As institutional investors like pension funds put more money into these less transparent private markets, this move by MSCI signals a strategic step to solve a real pain point that has weighed on portfolio managers and stakeholders alike.

In the bigger picture, MSCI’s share price has recovered somewhat after dipping earlier this year, with a 3% gain over the past month and a 4% increase in the past three months. While this latest product announcement has attracted attention, investors are still processing MSCI’s steady long-term growth trajectory. The stock is up 31% over the past year and 70% over the past five years. Momentum appears to be building again as the company continues to evolve its analytics platform and broaden its reach.

With MSCI rolling out new tools for the growing private credit market, investors may be considering whether the recent momentum reflects a new opportunity or if the current price already incorporates expectations for future growth.

Most Popular Narrative: 8% Undervalued

The most widely followed market narrative currently views MSCI as undervalued by roughly 8% when compared to its projected fair value. This perspective arises from upbeat expectations for earnings and margin expansion, underpinned by ongoing shifts in the asset management industry and MSCI’s own innovation.

"Accelerated development and cross-selling of proprietary data, analytics, and private capital solutions (including recently launched products and business lines like private equity benchmarks and risk tools) will tap into new client bases and increase wallet share among institutional clients, driving durable multi-year compounded revenue growth."

How does MSCI get this hefty premium? The secret lies in the narrative’s bold projections, such as future growth, rising margins, and a profit formula that rivals tech giants. Want to see what kind of ambitious numbers and market assumptions are backing up these forecasts? Discover what is driving the buzz behind this price target. Some of the key variables may surprise even seasoned followers.

Result: Fair Value of $619 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, slower revenue growth from fee compression or declining client retention could quickly challenge this optimistic outlook for MSCI’s future performance.

Find out about the key risks to this MSCI narrative.

Another View: A Price Tag That Raises Eyebrows

Looking at MSCI through the lens of industry price comparisons suggests a more expensive story than the earlier narrative. This method points out MSCI trades at a higher multiple than its industry average, which challenges the fair value optimism. Which approach do you trust more when the signals collide?

See what the numbers say about this price — find out in our valuation breakdown.

Stay updated when valuation signals shift by adding MSCI to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own MSCI Narrative

For those who want to dig deeper or challenge the prevailing views, it’s possible to analyze the numbers and craft your own narrative in just minutes, and Do it your way.

A great starting point for your MSCI research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.

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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.

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