MSCI (MSCI) To Report Q4 Earnings: What's In The Cards?

MSCI Inc. (NYSE:MSCI) is set to report fourth-quarter 2019 results on Jan 30.

The Zacks Consensus Estimate for fourth-quarter earnings has been steady at $1.62 over the past 30 days, indicating growth of 23.7% from the year-ago quarter’s reported figure.

The consensus mark for revenues is currently pegged at $402.7 million, which implies growth of 11.4% from the figure reported in the year-ago quarter.

The company beat the Zacks Consensus Estimate in all the trailing four quarters, delivering an average positive surprise of 4.9%.

Let’s see how things have shaped up prior to this announcement.

MSCI Inc Price and EPS Surprise

Key Factors to Consider

MSCI is likely to have benefited from its strong portfolio of offerings. Robust adoption of its solutions, driven by strong demand for cost-effective investments strategies with sustainable and risk-optimized returns, is expected to have driven top-line growth in the to-be-reported quarter.

Moreover, MSCI’s open architecture approach, which enables it to integrate content from any third-party application, is likely to have driven user growth as it allows clients to access content from anywhere.

Notably, the company secured a number of clients during the quarter, which include major U.S. universities, asset management firms and insurers, among others.

Additionally, MSCI’s continued investments in Analytics technology as well as developing new indices like the MSCI ACWI IMI (LON:IMI) Smart Cities Index and MSCI Climate Change Index for its clients is expected to have driven clientele.

The company also renewed its strategic alliance with Eurex to extend the terms of their license agreement for the existing MSCI index futures listed in Europe as well expand the agreement to include MSCI ESG indices.

However, expenses pertaining to the company’s acquisition of Carbon Delta are expected to have been a drag on its bottom line.

Q4 Development

MSCI extended its relationship with Blackrock (NYSE:BLK) for another 10 years. The renewed contract will reduce the license fee rate for ETFs with total expense ratios (TERs) below certain levels.

Moreover, all future reductions by BlackRock in the TERs of licensed BlackRock ETFs will reduce the license fee rates payable to MSCI but raise the possibility of incremental assets flowing into licensed BlackRock ETFs.

The renewed contract is expected to align their opportunities and successes and maximize long-term revenue growth for Blackrock.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of a positive earnings surprise.

MSCI carries a Zacks Rank #2 and has an Earnings ESP of +0.62%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks That Warrant a Look

Here are some companies, which, per our model, also have the right combination of elements to post an earnings beat this quarter:

Advanced Energy Industries (NASDAQ:AEIS) has an Earnings ESP of +10.8% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

CEVA, Inc (NASDAQ:CEVA) has an Earnings ESP of +27.06% and a Zacks Rank #1.

Perion Network Ltd (NASDAQ:PERI) has an Earnings ESP of +22.58% and a Zacks Rank #1.

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