UPDATE: Goldman Sachs Resumes Coverage on Moody's on Mixed Factors

In a report published Friday, Goldman Sachs analyst Andre Benjamin resumed coverage on Moody's Corporation MCO with a Neutral rating and $72.00 price target. In the report, Goldman Sachs noted, “We resume coverage of MCO with a Neutral rating and a $72, 12-month, EV/EBITDA-based target price for 2% total return, largely in line with the 4% average upside for the group. Key positives include (1) the strong competitive position of the ratings agency; (2) top-quartile returns, margins, and FCF conversion; and (3) almost no net debt and our forecasted top-quartile dividend growth and share repurchases. Shares outperformed the last three years (+131%/+21% vs. the S&P 500 since January 2011/YTD), driven by above-average growth from both its Ratings and Analytics business coupled with significant return of capital to shareholders. We believe shares are unlikely to continue outperforming over the next year because we see many of those positives as discounted and we see above-average deceleration in EBITDA growth (to 9% 2013E-2015E from 15% in 2010-2012). The fast growth still in line with the group average and other fundamentals remaining strong keep us from being more negative.” Moody's Corporation closed on Thursday at $71.31.