Mizuho starts coverage on S&P Global and Moody’s

Investing.com -- Mizuho initiated coverage of S&P Global with an "Outperform" rating and a price target of $599, while assigning Moody’s Corp a "Neutral" rating with a $504 target, citing valuation differences and growth potential in non-ratings businesses.

Both companies’ credit rating agencies benefit from strong moats, pricing power, and high-margin business models that act as “toll booths” on global debt issuance, Mizuho said adding that near-term issuance will remain choppy.

“Although near-term issuance has been volatile, over the medium-term we see issuance tailwinds due to M&A activity recovering and significant debt maturity walls,” analyst said

Mizuho prefers S&P Global over Moody’s, noting that the historical valuation gap between the two has widened, with Moody’s currently trading at a 13% premium to S&P Global versus a long-term average of 2%. The firm expects this premium to narrow as S&P’s Market Intelligence division stabilizes and its Ratings segment delivers more conservative growth estimates compared to Moody’s.

The note also highlighted the potential for artificial intelligence (AI) to drive efficiency gains for both companies, though regulatory considerations currently prevent AI from being directly used in ratings workflows.

For S&P Global, Mizuho values the stock at 31 times its 2026 adjusted EPS estimate, leading to a $599 price target. Moody’s is valued at 32 times 2026 adjusted EPS, supporting a $504 target.

“We believe SPGI's and MCO's credit rating agencies are among the highest-quality businesses with stable L-T growth rates, strong moats, and enduring pricing power,” analyst added.

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