Keefe Bruyette & Woods Assumes Coverage on MSCI with Market Perform, $48.00 PT

In a report published Thursday, Keefe Bruyette & Woods analyst Michael Needham assumed coverage on MSCI, Inc. MSCI with Market Perform and a $48.00 price target. According to the report, MSCI's subscription-driven revenue model generates relatively stable revenue, leading analysts to believe the firm will continue to generate solid revenue growth from its leading market position, however near-term margins will remain constrained from recent growth initiatives. In the long term, MSCI revenues are levered to an improving global equity market and the trend toward more global exposure in investment portfolios, a relatively compelling growth story. “Our discounted cash flow (DCF) based intrinsic value for MSCI is $46.29, or a 6% premium to the current share price,” the report said. Our $48 price target implies a forward P/E multiple of 20.1x our 2014 EPS estimate, which is a 19% premium to MSCI's 3-year average multiple of 16.9x.” Some risks to MSCI include loss of a large client, inadvertent or illegal disclosure of client or index data and investment cycle impact on clients. MSCI closed Thursday at $43.15 with shares trading down at 1.30%.