Moody's Corporation
MCO
$503.32
+0.91%
Moody's Corporation is a leading provider of credit ratings, research, and risk analysis, operating through two primary segments: Moody's Investors Service (MIS) and Moody's Analytics (MA). As one of the 'Big Three' credit rating agencies alongside S&P Global and Fitch, Moody's holds a dominant position in the fixed-income ratings market, with a wide economic moat built on regulatory barriers and decades of data. The current investor narrative centers on the company's recovery from a cyclical downturn in debt issuance, with recent quarterly results showing accelerating revenue growth and strong margin expansion, while the stock has rebounded from its 52-week low amid optimism about a rebound in capital markets activity and the potential for AI-driven efficiency gains in its analytics business.…
MCO
Moody's Corporation
$503.32
Related headlines
MCO 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Moody's Corporation's 12-month outlook, with a consensus price target around $560.48 and implied upside of +11.4% versus the current price.
Average Target
$560.48
0 analysts
Implied Upside
+11.4%
vs. current price
Analyst Count
—
covering this stock
Price Range
$505 - $610
Analyst target range
Moody's is covered by 21 analysts, with a consensus recommendation of 'Buy' and a mean rating of 1.75 (where 1 is Strong Buy and 5 is Sell). The average target price is $560.48, implying an upside of approximately 11.4% from the current price of $503.32. The distribution of ratings includes 10 Buy, 8 Hold, and 3 Sell, indicating a generally bullish sentiment but with some caution. The high target of $610 suggests that some analysts see significant upside potential, while the low target of $505 is only slightly above the current price, indicating that the stock is near the lower bound of analyst expectations.
Bulls vs Bears: MCO Investment Factors
Moody's presents a compelling bull case with accelerating revenue growth, strong margins, and a dominant market position, supported by a consensus Buy rating and 11.4% upside to analyst targets. However, the stock trades at a significant premium to peers, carries high debt, and faces cyclicality in its core ratings business. The bear case is anchored on valuation risk and potential AI disruption, which could compress multiples and erode the moat. Currently, the bull case has stronger evidence given the recent earnings acceleration and margin expansion, but the key tension is whether the premium valuation can be justified by sustained growth. If revenue growth decelerates or AI disruption materializes, the stock could face significant downside.
Bullish
- Accelerating Revenue Growth: Q1 2026 revenue grew 8.1% YoY to $2.079B, up from Q4 2025's $1.889B, signaling a rebound in debt issuance and capital markets activity. This acceleration is driven by strength in both MIS and Analytics segments, with MIS contributing $807M and Analytics $1.272B.
- Strong Profitability and Margins: Operating margin expanded to 44.3% in Q1 2026 from 42.1% in Q4 2025, with net margin at 31.8%. The company's gross margin of 74.5% reflects its asset-light, data-driven business model and pricing power.
- Dominant Market Position: As one of the 'Big Three' credit rating agencies, Moody's benefits from regulatory barriers and decades of accumulated data, creating a wide economic moat. This duopoly (with S&P) provides pricing power and high barriers to entry.
- Analyst Consensus Buy: With 21 analysts, the consensus rating is 'Buy' (mean 1.75), and the average target price of $560.48 implies 11.4% upside from the current price of $503.32. The high target of $610 suggests potential for 21.2% upside.
Bearish
- Premium Valuation: Trailing PE of 37.2x and forward PE of 26.6x are significantly above the industry average of 25x, implying a 49% premium. This leaves little room for error and makes the stock vulnerable to multiple compression if growth disappoints.
- Cyclicality of Ratings Business: Moody's Investors Service revenue is highly correlated with debt issuance volumes, which are sensitive to interest rates and economic conditions. The 1-year price decline of -1.2% reflects the recent downturn in capital markets.
- High Debt Levels: Debt-to-equity ratio of 1.81 indicates substantial leverage, which could strain cash flows if interest rates remain elevated. Interest expense in Q1 2026 was $66M, and the company's payout ratio of 28.5% limits financial flexibility.
- Underperformance vs. Market: Relative strength over 1 year is -21.7% compared to the S&P 500, indicating significant underperformance. The stock has only recovered to 92% of its 52-week range, suggesting lingering investor skepticism.
MCO Technical Analysis
Moody's stock has exhibited a strong recovery over the past six months, with the current price of $503.32 representing a 12.4% gain over the last three months and a 12.4% gain over the last six months. However, the 1-year price change is -1.2%, indicating that the stock has only recently recovered from a significant drawdown, with the 52-week low of $402.28 and high of $546.88. The current price sits at approximately 92% of the 52-week range (calculated as (503.32-402.28)/(546.88-402.28)), suggesting the stock is trading near the upper end of its range, reflecting renewed bullish momentum after a period of consolidation.
Beta
1.33
1.33x market volatility
Max Drawdown
-23.6%
Largest decline past year
52-Week Range
$402-$547
Price range past year
Annual Return
-1.2%
Cumulative gain past year
| Period | MCO Return | S&P 500 |
|---|---|---|
| 1m | +2.8% | +3.6% |
| 3m | +12.1% | +2.7% |
| 6m | +12.4% | +11.4% |
| 1y | -1.2% | +18.7% |
| ytd | +0.9% | +12.3% |
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MCO Fundamental Analysis
Moody's revenue for Q1 2026 was $2.079 billion, representing a year-over-year growth of 8.1% compared to Q1 2025's $1.924 billion. This marks an acceleration from the previous quarter's revenue of $1.889 billion, which had grown only 13% from the prior year period, indicating a positive trend in the company's core ratings business. The revenue growth is driven by a rebound in debt issuance, particularly in the corporate and structured finance segments, as evidenced by the MIS segment contributing $807 million in revenue, while the Analytics segment contributed $1.272 billion, showing diversification in the business model.
Quarterly Revenue
$2.1B
2026-03
Revenue YoY Growth
+8.1%
YoY Comparison
Gross Margin
74.5%
Latest Quarter
Free Cash Flow
$3.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is MCO Overvalued?
Given that Moody's has positive net income, the primary valuation metric selected is the price-to-earnings (PE) ratio. The trailing PE is 37.2x, while the forward PE is 26.6x, indicating that the market expects significant earnings growth over the next year. The gap between trailing and forward PE suggests that the market is pricing in a substantial recovery in earnings, which is consistent with the recent acceleration in revenue growth and margin expansion. Compared to the industry average PE of 25x (based on the financial data sector), Moody's trades at a premium of approximately 49%, reflecting its dominant market position and high profitability.
PE
37.2x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 28x~52x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
24.5x
Enterprise Value Multiple