MSCI Earnings: Good Sales Quarter and Few Negatives Result in Positive Market Reaction

Wide-moat MSCI had a relatively strong second quarter. Revenue grew 13% to $621 million, which beat FactSet consensus of $602 million and our estimate of $614 million. MSCI benefited from rising equity markets, boosting asset-based fees. In addition, nonrecurring index subscription revenue was surprisingly strong. As we update our model, we are raising our fair value estimate for MSCI to $430 from $412 to account for market appreciation having a positive effect on asset-based fees and modestly higher subscription revenue across the firm's other segments. While there are many positive attributes to MSCI's business model, we believe these attributes are well understood by the market and regard shares as pricey.