MSCI Earnings: Index Franchise Steady, Other Segments Resilient Not Immune From Market Factors

Wide-moat-rated MSCI started 2023 with a decent quarter. Revenue, adjusted EBITDA, and adjusted EPS were $592 million, $345 million, and $3.14 which compares with the FactSet consensus estimates of $594 million, $342 million, and $3.01 respectively. MSCI’s largest and most profitable segment is its index segment with trends generally holding up. However, MSCI’s net subscription sales are seeing deceleration in its other segments, particularly for ESG and climate subscriptions. Overall, we are maintaining our fair value estimate of $412. However, given MSCI’s exposure to asset-based fees and a wide variation of outcomes in its ESG business, we are adjusting the Morningstar Uncertainty Rating to High from Medium.