UBS Downgrades Moody's Corp (MCO) to Neutral, 'Debt Issuance Strength May Not Be Sustainable'
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UBS analyst Alex Kramm downgraded Moody's Corp (NYSE: MCO) from Buy to Neutral with a price target of $392.00 (from $383.00).
The analyst comments "Following two years of outsized debt issuance levels, we are increasingly concerned that the medium-term outlook can only soften from here, while we think MCO shares are pricing in a continuation of recent trends. We point to data from the recent UBS Evidence Lab Survey that suggest C-suite executives in the US intend to borrow less over the next 12 months, turning their focus to debt pay-down and other uses of capital. Additionally, the first few weeks of the 3Q suggest that strength has continued to wane from the highs of the 1Q. While we continue to appreciate the strength of MCO's business model and see exciting new opportunities in Moody's Analytics that can drive outsized growth (KYC, ESG, CRE, etc.), we think ratings headwinds may be too large to overcome. With MCO's shares up 30%+ YTD, we are moving to the sidelines."
Shares of Moody's Corp closed at $378.58 yesterday.
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