MSCI compounds steadily on Index demand, but fee pressure and Climate softness cap growth. At 31 times past profit, the price leaves 8% upside to my $641.48 target.
Key points
- $54.8 million in Q3 FY26 net new sales rose 41% from Q3 FY25 on record Analytics wins in Q3 FY26.
- $2,905 billion in Q3 FY26 linked ETF assets support fees though average fee rates fell from Q3 FY25.
- $6.72 billion in Q3 FY26 debt against $260 million cash in Q3 FY26 leaves leverage at 2.9 times in Q3 FY26.
The call
The price demands perfection. At $593.01, MSCI trades at 31 times trailing profit through Q3 FY26, which needs double digit growth with steady margins. That leaves no room for fee cuts or Climate cancellations in the next year.
Quarterly revenue in $ millions keeps climbing- Reported revenue
- My forecast
SEC XBRL facts and Oct 20 2026 8-K and 10-Q; Q4 FY26E is mine.
Growth will be good but slower. I expect $22.12 of 2027 profit as Index gains offset Climate softness and buybacks add lift in 2027. The franchise compounds steadily, just not fast enough to justify chasing after the recent jump in 2026.
Valuation
Index is 60 percent of sales- Index$532.6060%
- Analytics$191.0021%
- Sustainability$93.7011%
- Private Assets$74.708.4%
Q3 FY26 10-Q filed Oct 20 2026; shares are percent of revenue.
| Step | Figure |
|---|
| 2026 revenue | $3.51 billion in FY26 |
| 2027 revenue | $3.84 billion in FY27, up 9.5% |
| 2027 adjusted profit | $22.12 per share in FY27 |
| Multiple | 29 times FY27 profit |
| Target | $641.48 per share in 12 months |
Adjusted profit means profit ignoring one time items. The 29 times multiple (price equals 29 years of that profit) fits peers with similar moats at 28 to 32 times profit in 2027. At 8% upside to today in 2026, the reward does not beat the risk.
Risks
- Index fee rates keep falling in 2027 as clients shift to cheaper custom products, visible in lower fee rates each quarter in 2027.
- Climate cancellations spread beyond the Americas in 2027, visible in retention below 91% in any quarter in 2027.
- Higher rates in 2027 lift cost on $810 million of variable loans in 2027, visible in rising interest expense each quarter in 2027.
What would change my mind
I would turn positive if net new sales exceed $60 million in two straight quarters in 2027 with retention above 95% in each quarter in 2027.