🔥 NEW AI-picked stock strategies for Canadian market!Unlock Canadian AI Picks

Morgan Stanley boosts S&P Global stock target, expects strong EPS growth through 2025

EditorAhmed Abdulazez Abdulkadir
Published 2024-09-05, 06:54 a/m

SPGI
0.18%

On Thursday, Morgan Stanley (NYSE:MS) updated its outlook on S&P Global (NYSE: SPGI), increasing the price target to $564 from the previous $530 while maintaining an Overweight rating on the stock. The firm highlighted the company's robust competitive position, significant market share, and high profit margins as key factors supporting the positive assessment.

The analyst from Morgan Stanley praised S&P Global for its financial strength and potential for growth, noting the company's ability to leverage its pricing power, innovate with new products, expand globally, and capitalize on cross-enterprise opportunities. These strategies are expected to contribute to a low-teens earnings per share (EPS) compound annual growth rate (CAGR) through 2025.

S&P Global's involvement in artificial intelligence (AI) was also emphasized as a positive aspect, with the company being recognized as a top performer within the Information Services sector based on Morgan Stanley's AI framework. The firm's analysis suggests that S&P Global is well-positioned to benefit from AI advancements.

Additionally, the company's commitment to shareholder returns was underscored. S&P Global aims to return 85% of its free cash flow (FCF) to shareholders through dividends and stock buybacks, which is indicative of its strong financial management and shareholder-friendly policies.

The analyst concluded by pointing to S&P Global's solid balance sheet and the attractive valuation of the company's stock, describing it as a best-in-class business within the Information Services industry.

In other recent news, S&P Global has been demonstrating a strong financial performance with a significant surge in total revenue, up by 16%, driven by a 60% increase in transaction revenue from the ratings division. The company's subscription products also saw an 8% year-over-year increase. Goldman Sachs (NYSE:GS) and BMO (TSX:BMO) Capital have raised their price targets on S&P Global shares, citing strong earnings and revenue results that surpassed both their own estimates and the consensus.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads.

The Ratings business was particularly noted for driving the positive revision cycle, benefiting from high debt issuance volumes. Management has significantly upgraded its full-year 2024 outlook for rated debt issuance, jumping from a 6-10% increase to approximately 25%. This adjustment is expected to result in mid-teens growth in Ratings revenue.

In other recent developments, S&P Global successfully completed the acquisition of Visible Alpha, enhancing the company's financial modeling capabilities. CEO Doug Peterson is set to retire with Martina Cheung taking over as CEO starting November 1st.

InvestingPro Insights

Complementing Morgan Stanley's optimistic outlook, S&P Global (NYSE: SPGI) exhibits a formidable financial profile as reflected in real-time metrics from InvestingPro. With a market capitalization of $160.61 billion and a high P/E ratio of 48.4, the company's valuation is robust, albeit trading at a high earnings multiple. This high multiple is partially justified by the company's revenue growth, which has increased by 10.09% over the last twelve months as of Q2 2024, and a notable gross profit margin of 68.13% in the same period.

InvestingPro Tips highlight S&P Global's track record of consistent shareholder returns, with a perfect Piotroski Score of 9 indicating strong financial health. The company has not only raised its dividend for 10 consecutive years but has also maintained dividend payments for 54 consecutive years, showcasing its commitment to shareholder wealth. Additionally, analysts predict the company will remain profitable this year, a sentiment that aligns with Morgan Stanley's positive growth projections. For investors interested in a deeper dive, there are over 10 additional InvestingPro Tips available at https://www.investing.com/pro/SPGI, providing further insights into S&P Global's financial and operational performance.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads.

While some analysts have revised their earnings expectations downwards for the upcoming period, S&P Global's long-term performance includes a high return over the last decade and a strong return over the last five years. The company's stock is also trading near its 52-week high, reflecting investor confidence in its market position and future outlook. These data points and expert analyses from InvestingPro offer valuable context for investors considering Morgan Stanley's updated price target and the company's strategic initiatives.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Should you invest $2,000 in SPGI right now?

Before you buy stock in SPGI, consider this: ProPicks AI are 6 easy-to-follow model portfolios created by Investing.com for building wealth by identifying winning stocks and letting them run. Over 150,000 paying members trust ProPicks to find new stocks to buy – driven by AI. The ProPicks AI algorithm has just identified the best stocks for investors to buy now. The stocks that made the cut could produce enormous returns in the coming years. Is SPGI one of them?

Reveal Undervalued Stocks Now

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.