MSCI Sees Positive Outlook for 2025 Amid Strong Q3 Earnings

MSCI Inc reported a strong performance in its third-quarter results, exceeding revenue expectations.

Analysts suggest that improved purchasing conditions on the buy-side could lead to a notable increase in MSCI's organic revenue growth in 2025. Goldman Sachs has highlighted this potential resurgence, predicting a favorable impact on MSCI's stock valuation.

George Tong, an analyst at Goldman Sachs, has upgraded MSCI’s rating from Neutral to Buy and has increased the price target from $617 to $723 per share.

Insights on Fund Flows

While global active fund outflows stabilized at the end of the third quarter, the U.S. saw a resurgence of inflows into active equity funds after the presidential elections. Tong attributes this shift to various policy-related rotations that are likely to influence investment patterns.

Positive Momentum for New Funds

The momentum for the formation of new funds globally is expected to persist into 2025. This outlook is bolstered by a widening of stock returns that reaches beyond just the major technology stocks, particularly under a potential Trump administration.

ESG Growth Forecast

Expectations for growth in environmentally sustainable investing (ESG) revenues are also optimistic for 2025. Analyst Tong noted that the visibility of ESG strategies in the U.S. post-election is likely to empower fund managers to adopt strategies that will benefit from the political climate. Furthermore, regulatory support from the Sustainable Finance Disclosure Regulation (SFDR) in the European Union has prompted significant inflows into ESG equity products.

Potential for Stock Upside

Given the strengthening conditions on the buy-side, there appears to be considerable upside potential for MSCI shares. Analysts expect earnings per share (EPS) growth in 2025 and 2026 to surpass consensus estimates, further enhancing the appeal of MSCI's stock.

As of the latest update, MSCI shares have risen by 0.63%, trading at $615.38.

MSCI, Earnings, Stocks