Ratings agency Moody's raised its full-year adjusted profit forecast above Wall Street estimates and posted a nearly 31 per cent rise in third-quarter earnings on Tuesday, on strong demand for its research and analytics products.
WHY IT'S IMPORTANT Growing expectations of a soft landing for the U.S. economy as the Federal Reserve began its rate cut cycle in September have spurred investors to spend more on analytics and data-related products to enable better investments.
This has helped firms such as Moody's to perform well.
KEY QUOTE "Moody's record-breaking revenue performance in the third quarter is a testament to our unwavering status as the Agency of Choice for our customers and our actions to prime the business for durable future growth," said CEO Robert Fauber in a statement.
BY THE NUMBERS Revenue in Moody's analytics unit, which provides financial intelligence and analytical tools, grew 7.0 pe rcent to US$831 million in the quarter ended Sept. 30 from a year earlier, while revenue in the investor service arm rose nearly 41 per cent to US$982 million.
Total revenue for the company came in at US$1.81 billion, up from US$1.47 billion a year earlier.
Adjustable net income was US$585 million, or US$3.21 per share, compared with US$447 million, or US$2.43 per share, a year earlier.
Moody's expects fiscal year 2024 adjusted earnings per share to be between US$11.90 and US$12.10, largely above analysts' average estimate of US$11.69, according to data compiled by LSEG. Its previous forecast was in the range of US$11 to US$11.40.
MARKET REACTION
Shares of Moody's were up 2.0 per cent in trading before the bell. They have gained about 25 per cent so far this year.