MSCI Earnings: Strong Finish to 2023, With Solid Sales and Bull Market Boosting Asset-Based Fees

MSCI ended 2023 on a high note with strong fourth-quarter results. Revenue of $690 million easily beat our estimate of $662 million and the FactSet consensus estimate of $663 million. While the bulk of the beat was from nonrecurring index subscription sales and asset-based fees, the firm’s recurring businesses held up well. Adjusted EBITDA expenses were largely in line with our expectations, and given the revenue beat, adjusted EBITDA surpassed our estimate and the FactSet consensus estimate by 7%. After tweaking our model, we are increasing our fair value estimate to $470 per share from $440, primarily to include higher asset-based revenue and modestly higher expectations for the analytics and index subscription businesses. While we acknowledge that MSCI has a wide-moat index franchise with many positive characteristics, we regard the shares as pricey at current levels.