IBD Stock Analysis
- Back above 667.17 buy point, as well as 669.82 alternative entry
- RS line near high for this Long-Term Leader
- S&P Global, Moody’s also in buy zones
Industry Group Ranking
* Not real-time data. All data shown was captured at 4:25PM EST on 11/16/2021.
MSCI stock is the IBD Stock Of The Day as the financial services company reclaims a buy point after bullish support at a key level.
MSCI (MSCI) provides critical tools and services for global investors. Those include indexes used to create and benchmark exchange traded funds (ETFs) and mutual funds. It’s seeing strong demand in a rising area of growth — environmental, social and governance (ESG) products and services. At the same time, its core indexing business remains robust.
Most (62%) of MSCI’s revenue comes from its index business and 27% from an analytics business. The fast-growing ESG and Climate solutions business currently makes up 8% of revenue.
President Joe Biden’s newly passed $1 trillion infrastructure bill should support the bull market for ESG investing, analysts say. The spending calls for upgrades to the nation’s roads, power grid, EV charging networks and more.
In addition, MSCI stock belongs to the IBD Long-Term Leaders list, with accelerating earnings and revenue growth.
MSCI Stock Technical Analysis
Shares rose 2.15% to 675.15 on the stock market today, after a strong rebound from the 50-day line Friday. MSCI stock regained a 667.17 buy point from a seven-week flat base, according to MarketSmith chart analysis.
It’s a late-stage base that formed around the 50-day line, which is a slight negative. If the breakout doesn’t work, investors can use a close below the 50-day line as a sell signal.
Shares of MSCI are also in buy range from an alternate entry of 669.82, a dime above the Nov. 1 intraday high.
The relative strength line for MSCI stock is slightly below the consolidation peak. It rose sharply for most of 2018 and 2019 and has revived in 2021. A rising RS line means that a stock is outperforming the S&P 500 index. It is the blue line in the chart shown.
Among peers, S&P Global (SPGI) and Moody’s (MCO) gained 2.4% and 2.8%, respectively. CME Group (CME) and FactSet Research Systems (FDS) both fell 0.45%. SPGI stock, Moody’s and CME are also in buy range after recent breakouts, while FactSet is extended. S&P Global is on the Long-Term Leaders watchlist.
The specialty financial services industry group is acting well, ranked No. 19 out of 197 groups, according to IBD Stock Checkup.
MSCI stock’s IBD Composite Rating, which combines key fundamental and technical metrics in a single easy-to-use score, is a solid 88 out of 99.
It holds an equally strong Relative Strength Rating of 89 out of a possible 99. That means it has outperformed 89% of all stocks in the past year.
And MSCI shows eight quarters of rising fund ownership. Well-regarded funds such as Fidelity Contrafund own MSCI stock.
MSCI Earnings and Fundamentals
Wall Street sees MSCI earnings rising 27% in 2021 to $9.93 per share, according to FactSet. Revenue is seen growing 20% to $2.031 billion. Analysts expect both MSCI earnings and revenue to grow further in 2022, though at a slower pace.
The New York based company sports a superior EPS Rating of 93 out of 99.
Over the past three quarters, MSCI averaged 20% revenue growth, above the 11% pace of the past three years, according to IBD’s Stock Checkup tool.
In Q3, MSCI’s recurring subscription revenue increased 14.2%, while asset-based fees jumped 41.2%. The company calls those metrics “fundamental indicators” of the long-term health of the MSCI franchise. But MSCI lowered full-year free cash flow guidance, while warning of higher operating expenses.
The small ESG and Climate segment drove Q3 revenue growth, rising 53% year over year. Institutional investors have flocked to ESG products in recent years, with the infrastructure bill likely to spur growth further.
“Our deep engagement with clients … supports MSCI’s continued leadership of the investment industry’s critical transition to a net-zero world,” MSCI CEO Henry Fernandez said in the Q3 earnings release.
Six analysts on Wall Street rate MSCI stock a buy, four have a hold and two have a sell, FactSet says.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
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