Morningstar, Inc.
MORN
$203.83
+0.48%
Morningstar, Inc. is a leading independent provider of investment research, data, and analytics to financial advisors, asset managers, and institutional investors, operating across five reportable segments including Morningstar Direct Platform, PitchBook, Morningstar Credit, Morningstar Wealth, and Morningstar Retirement. The company is best known for its proprietary fund ratings, the iconic Morningstar Style Box, and its widely followed star-rating system, which gives it a unique position as both a data provider and a trusted arbiter of investment quality. The current investor narrative centers on the company's transition from a traditional data provider to a broader financial technology platform, with particular focus on PitchBook's growth trajectory in private markets and the integration of credit and wealth capabilities. Recent attention has also been drawn to margin expansion efforts and the company's ability to sustain mid-single-digit organic revenue growth while investing in AI-driven product enhancements and navigating a challenging environment for asset managers and financial data providers.…
MORN
Morningstar, Inc.
$203.83
Investment Opinion: Should I buy MORN Today?
Based on the synthesis of analyst targets, valuation, and fundamental trends, the recommendation is a Hold with a bullish bias. The average analyst target of $236.67 implies a 16.1% upside, and the forward PE of 14.62x suggests that earnings growth is expected to accelerate. However, the lack of a clear consensus recommendation and the stock's recent underperformance warrant caution. Supporting evidence includes the 8.48% year-over-year revenue growth, a net margin of 17.95% that has expanded from 13.49% in Q1 2025, and a strong ROE of 30.62%. Free cash flow of $442.6 million provides ample coverage for dividends and buybacks. The forward PE of 14.62x is attractive relative to the trailing PE of 24.33x, but the PEG ratio of 7.25 indicates that the trailing multiple is high relative to growth. The biggest risks are the potential for revenue growth to decelerate below 8%, margin compression if operating expenses rise, and the limited analyst coverage that could lead to volatility. The rating would upgrade to Buy if revenue growth accelerates above 10% or if the forward PE remains below 15x with upward earnings revisions. It would downgrade to Sell if revenue growth falls below 5% or if operating margins contract below 20%. Relative to its own history, the stock is undervalued on a PS basis (3.72x vs. historical average above 20x), but fairly valued on a PE basis given the growth outlook.
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MORN 12-Month Price Forecast
Morningstar presents a balanced risk/reward profile. The company's strong recurring revenue, expanding margins, and robust free cash flow support a positive long-term outlook, while the attractive forward PE suggests that earnings growth is priced in. However, mid-single-digit revenue growth and a high PEG ratio limit the potential for significant multiple expansion without an acceleration in growth. The limited analyst coverage adds uncertainty. I would upgrade to bullish if revenue growth accelerates above 10% or if PitchBook shows sustained high-teens growth. I would downgrade to bearish if operating margins fall below 20% or if revenue growth decelerates below 5%.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Morningstar, Inc.'s 12-month outlook, with a consensus price target around $236.67 and implied upside of +16.1% versus the current price.
Average Target
$236.67
0 analysts
Implied Upside
+16.1%
vs. current price
Analyst Count
—
covering this stock
Price Range
$220 - $260
Analyst target range
Morningstar is covered by a relatively small number of analysts, with only 3 providing target prices in the provided data. The consensus recommendation is not explicitly stated as a single rating, but the institutional ratings show a predominantly bullish tilt, with BMO Capital maintaining an Outperform rating as recently as February 2026 and UBS reiterating a Buy rating in October 2025. The average target price is $236.67, which implies an upside of approximately 16.1% from the current price of $203.83. This suggests that the analyst community sees meaningful upside potential, though the limited coverage universe means the consensus may be less robust than for larger-cap peers. The bullish sentiment is supported by the company's strong fundamentals and the recent recovery in the stock price, but the lack of a clear consensus recommendation (the data shows 'none') indicates that the analyst community may not have a unified view. The target price range spans from a low of $220.00 to a high of $260.00, representing a spread of $40.00, or approximately 18% of the average target. The high target of $260 implies a scenario where Morningstar successfully accelerates revenue growth, expands margins, and potentially benefits from multiple expansion as the market re-rates the stock. The low target of $220 assumes more modest growth and perhaps some margin pressure or slower adoption of new products. The relatively tight spread between the low and high targets suggests a higher degree of conviction among analysts compared to a wider dispersion, though the small number of analysts limits the statistical significance. The estimated EPS average of $16.76 for the forward year, with a range of $16.63 to $16.87, shows tight earnings estimates, which is a positive signal for near-term predictability. However, the limited analyst coverage (only 3 firms) is a notable risk factor, as it can lead to higher volatility and less efficient price discovery, particularly for a mid-cap stock like Morningstar.
Bulls vs Bears: MORN Investment Factors
The bull case for Morningstar rests on its strong recurring revenue base, expanding margins, robust free cash flow, and a forward PE that suggests significant earnings growth ahead. The bear case centers on mid-single-digit revenue growth, a high PEG ratio, elevated debt, and limited analyst coverage. Currently, the bull evidence appears slightly stronger given the 16% upside to analyst targets, the 528 basis point operating margin expansion, and the attractive forward valuation. The most important tension is whether Morningstar can accelerate revenue growth to justify its forward earnings expectations; if it fails, the stock could face multiple compression. Conversely, if PitchBook and other growth initiatives gain traction, the stock could re-rate higher.
Bullish
- Analyst targets imply 16% upside: The average analyst target price of $236.67 represents a 16.1% upside from the current price of $203.83. With a low target of $220 and a high of $260, even the most conservative analyst sees at least 7.9% upside, suggesting a favorable risk/reward skew.
- Forward PE of 14.6x is attractive: The forward PE of 14.62x is significantly below the trailing PE of 24.33x, implying the market expects strong earnings growth. This forward multiple is also below the broader market average, offering value if earnings materialize.
- Operating margin expansion underway: Operating margin improved from 19.61% in Q1 2025 to 24.89% in Q4 2025, a 528 basis point expansion. This demonstrates operating leverage as revenue scales, with net margin also rising from 13.49% to 17.95% over the same period.
- Strong free cash flow and ROE: Trailing twelve-month free cash flow is $442.6 million, comfortably covering the $18.9 million quarterly dividend. ROE of 30.62% is exceptionally high, reflecting efficient capital deployment and a high-margin, asset-light business model.
Bearish
- Revenue growth is only mid-single-digit: Q4 2025 revenue grew 8.48% year-over-year, which is solid but not spectacular. The growth rate is well below high-growth fintech peers, and the company may struggle to accelerate meaningfully given its size and market maturity.
- PEG ratio of 7.25 signals overvaluation: The PEG ratio of 7.25 is very high, indicating that the trailing PE of 24.33x is expensive relative to the company's earnings growth rate. If growth does not accelerate, the stock could face multiple compression.
- Elevated debt-to-equity of 1.15: The debt-to-equity ratio of 1.15 is relatively high for a data and analytics company. While cash flows are stable, the company has been actively repaying debt and repurchasing shares, which reduces financial flexibility.
- Limited analyst coverage and no consensus: Only 3 analysts cover the stock, and the recommendation field shows 'none', indicating a lack of unified consensus. This limited coverage can lead to higher volatility and less efficient price discovery.
MORN Technical Analysis
Morningstar's stock is in a recovery phase following a significant drawdown, with the current price of $203.83 sitting at approximately 64% of its 52-week range (low of $141.49, high of $238.80). The 1-year price change of -12.78% reflects the broader weakness that persisted through mid-2026, but the stock has rebounded sharply from its June lows near $141.84, suggesting a potential trend reversal is underway. The current price is well above the 52-week low but still 14.6% below the 52-week high, indicating the stock has room to run if momentum sustains. The 3-month price change of +32.63% dramatically outpaces the 1-year decline, signaling a powerful short-term recovery that has reversed the longer-term downtrend. However, the 1-month change of -4.60% shows recent consolidation after the sharp rally, with the stock pulling back from its August highs near $218.94. This divergence between strong 3-month momentum and negative 1-month performance suggests the stock is digesting its gains and could be forming a base for the next leg higher, though the relative strength versus SPY over the past month (-3.64%) indicates recent underperformance. The 6-month change of +13.83% and YTD change of -3.13% further confirm that the recovery is still in its early-to-mid stages. Key technical support lies at the 52-week low of $141.49, with secondary support around the $190-$195 area where the stock recently found buyers. Resistance is established at the 52-week high of $238.80, and a breakout above this level would signal a full trend reversal and potentially attract momentum buyers. The beta of 0.996 indicates the stock moves roughly in line with the broader market, suggesting it is not a high-volatility name and may appeal to investors seeking market-like risk with idiosyncratic recovery potential. The max drawdown of -46.51% highlights the severity of the prior decline, and the current recovery is still well within the context of that drawdown.
Beta
1.00
1.00x market volatility
Max Drawdown
-46.5%
Largest decline past year
52-Week Range
$141-$239
Price range past year
Annual Return
-12.8%
Cumulative gain past year
| Period | MORN Return | S&P 500 |
|---|---|---|
| 1m | -4.6% | -0.5% |
| 3m | +32.6% | +2.3% |
| 6m | +13.8% | +16.6% |
| 1y | -12.8% | +14.8% |
| ytd | -3.1% | +11.7% |
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MORN Fundamental Analysis
Morningstar's revenue trajectory remains solidly positive, with Q4 2025 revenue of $641.1 million representing 8.48% year-over-year growth compared to Q4 2024's $591.0 million. The multi-quarter trend shows consistent sequential growth, with revenue rising from $581.9 million in Q1 2025 to $605.1 million in Q2, $617.4 million in Q3, and $641.1 million in Q4, demonstrating steady execution. The licensed-based segment, which includes Morningstar Direct and data subscriptions, is the largest revenue contributor at $437.8 million, followed by transaction-based revenue at $113.1 million and asset-based revenue at $90.2 million. This revenue mix is favorable because licensed-based revenue is recurring and high-margin, providing a stable foundation for growth, while the asset-based segment is tied to market levels and could be a swing factor. The growth trend implies that Morningstar is successfully cross-selling its platform capabilities and expanding its footprint in private markets through PitchBook, though the pace of growth remains in the mid-single-digit range rather than the high-growth profile of some fintech peers. Profitability remains robust, with Q4 2025 net income of $115.1 million and a net margin of 17.95%, up from 14.84% in Q3 2025 and 13.49% in Q1 2025. The gross margin of 61.13% is stable and typical for a data and analytics company, while the operating margin of 24.89% in Q4 2025 shows significant improvement from 19.61% in Q1 2025, indicating operating leverage is kicking in as revenue scales. The EBITDA margin of 32.66% in Q4 2025 is healthy, though it declined from 37.56% in Q4 2024 due to higher operating expenses and one-time items. The company's ability to expand margins while investing in growth initiatives is a positive signal, but the year-over-year margin compression in Q4 warrants monitoring. The balance sheet shows a debt-to-equity ratio of 1.15, which is elevated but manageable for a company with stable cash flows, and a current ratio of 0.985 indicates slightly tight liquidity. Free cash flow on a trailing twelve-month basis is $442.6 million, providing ample coverage for dividends and share repurchases, with a dividend payout ratio of just 20.55%. The ROE of 30.62% is exceptionally strong, reflecting efficient use of equity capital, while the ROA of 9.63% is solid for the industry. The company generated $204 million in operating cash flow in Q4 2025 and spent $42.7 million on capex, resulting in $161.3 million of free cash flow, which comfortably covers the $18.9 million in dividends paid. The cash balance of $474.5 million provides a buffer, though the company has been actively repurchasing stock ($395.3 million in Q4 2025) and repaying debt ($225 million), which reduces financial flexibility but signals confidence in future cash generation.
Quarterly Revenue
$641100000.0B
2025-12
Revenue YoY Growth
+8.5%
YoY Comparison
Gross Margin
61.1%
Latest Quarter
Free Cash Flow
$442600000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is MORN Overvalued?
With trailing net income positive at $115.1 million in Q4 2025, the PE ratio is the appropriate primary valuation metric. The trailing PE of 24.33x compares to a forward PE of 14.62x, implying the market expects significant earnings growth over the next twelve months. This large gap between trailing and forward multiples suggests that analysts are forecasting a substantial rebound in profitability, likely driven by margin expansion and revenue growth. The PEG ratio of 7.25, however, indicates that the trailing PE is high relative to the company's earnings growth rate, which could be a concern if growth does not accelerate as expected. Compared to the financial data and stock exchange industry, Morningstar's trailing PE of 24.33x is moderately above the sector average, though precise peer averages are not available in the provided data. The PS ratio of 3.72x and EV/Sales of 3.50x are reasonable for a company with a 61% gross margin and recurring revenue streams. The price-to-book ratio of 7.45x is elevated, reflecting the company's asset-light business model and strong ROE of 30.62%. The dividend yield of 0.84% is modest but sustainable given the low payout ratio. The forward PE of 14.62x suggests that if earnings meet expectations, the stock is attractively valued relative to its growth prospects, but the market may be pricing in execution risk. Historically, Morningstar's PE ratio has ranged from the low 20s to over 60x during periods of depressed earnings. The current trailing PE of 24.33x is near the lower end of its historical range, which could indicate a value opportunity if earnings normalize. The PS ratio of 3.72x is also well below the historical average, as the stock previously traded at PS ratios above 20x in 2021 and 2022. This compression in valuation multiples reflects the market's more cautious stance on the company's growth outlook, but it also means that any positive surprise could lead to multiple expansion. The current valuation appears to be pricing in a moderate growth scenario, and the stock is not expensive relative to its own history, though the premium to the broader market is justified by its strong margins and recurring revenue.
PE
24.3x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 19x~86x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
13.8x
Enterprise Value Multiple
Investment Risk Disclosure
Morningstar faces financial risks stemming from its elevated debt-to-equity ratio of 1.15 and a current ratio of 0.985, which indicates slightly tight liquidity. While free cash flow of $442.6 million comfortably covers the dividend, the company has been aggressively repurchasing shares ($395.3 million in Q4 2025) and repaying debt ($225 million), which reduces financial flexibility. Additionally, the EBITDA margin declined from 37.56% in Q4 2024 to 32.66% in Q4 2025, highlighting potential margin pressure from higher operating expenses and one-time items. Revenue growth of 8.48% year-over-year, while steady, is not high enough to justify a premium valuation without further margin expansion. Market and competitive risks include the potential for valuation compression given the high PEG ratio of 7.25 and the stock's premium to the broader market. The financial data and analytics industry is highly competitive, with peers like Bloomberg, FactSet, and S&P Global constantly innovating. Morningstar's beta of 0.996 means it moves roughly in line with the market, but its 1-year relative strength of -27.79% indicates significant underperformance, which could persist if the company fails to differentiate its offerings. Regulatory changes affecting asset managers or data providers could also impact demand. In a worst-case scenario, a recession or a significant market downturn could reduce asset-based revenue and slow new business wins, leading to earnings misses. The stock could retest its 52-week low of $141.49, representing a 30.6% decline from the current price of $203.83. If analyst estimates are cut and the forward PE compresses to 12x on lower EPS, the downside could be even more severe. The max drawdown of -46.51% over the past year illustrates the stock's vulnerability to sharp declines.
FAQ
The key risks include: 1) Financial risk from elevated debt-to-equity of 1.15 and a current ratio below 1, which could limit flexibility in a downturn. 2) Competitive risk from larger peers like Bloomberg and S&P Global, which could pressure pricing and market share. 3) Macro risk, as a market downturn could reduce asset-based revenue and slow new business. 4) Company-specific risk from limited analyst coverage (only 3 analysts) and no consensus recommendation, which can lead to volatility. Additionally, the stock has a high PEG ratio of 7.25, making it vulnerable to multiple compression if growth disappoints.
The 12-month forecast is based on three scenarios: Bull case (25% probability) targets $260-$280, driven by accelerated revenue growth and margin expansion. Base case (55% probability) targets $230-$245, assuming steady mid-single-digit growth and margin stability. Bear case (20% probability) targets $140-$160, reflecting a revenue slowdown and margin compression. The most likely scenario is the base case, with the key assumption that revenue growth remains between 7% and 9% and operating margins stay above 22%. The average analyst target of $236.67 aligns with the base case.
MORN appears fairly valued to slightly undervalued on a forward basis. The forward PE of 14.62x is below the trailing PE of 24.33x and the broader market average, suggesting that the market expects earnings growth. The PS ratio of 3.72x is well below the historical average of over 20x, indicating significant multiple compression. However, the PEG ratio of 7.25 is high, implying that the trailing multiple is expensive relative to growth. Compared to peers in the financial data industry, MORN's valuation is moderate. The market is pricing in a scenario of steady growth and margin expansion, but not a dramatic acceleration.
From a risk/reward perspective, MORN offers a favorable setup with 16.1% upside to the average analyst target of $236.67, while the downside to the 52-week low of $141.49 represents a 30.6% loss. The forward PE of 14.62x suggests that earnings growth is expected, and the company's 30.62% ROE and $442.6 million in free cash flow demonstrate strong profitability. However, the stock is not without risks, including mid-single-digit revenue growth and a high PEG ratio of 7.25. It is a good buy for long-term investors who believe in the company's ability to accelerate growth and expand margins, but short-term traders may find better opportunities elsewhere.
MORN is more suitable for long-term investment. The company operates in a stable industry with recurring revenue, pays a modest dividend (0.84% yield), and has a beta of 0.996, indicating market-like volatility. The stock's 1-year decline of 12.78% and max drawdown of 46.51% show that short-term trading can be risky. Earnings visibility is moderate, with tight analyst EPS estimates ($16.63-$16.87), but the lack of coverage adds uncertainty. A minimum holding period of 2-3 years is recommended to allow for the realization of growth initiatives and margin expansion. Short-term traders may find opportunities around earnings, but the stock is best suited for patient investors.