Shares of MSCI Inc (NYSE:MSCI) continued to rally on Wednesday, after the company Tuesday reported third-quarter revenue growth.
The company’s net new subscription sales significantly exceeded expectations for the third quarter, and the strong sales momentum is expected to continue, according to RBC Capital Markets.
The MSCI Analyst: Analyst Ashish Sabadra reiterated an Outperform rating and price target of $655.
The MSCI Thesis: The company reported net new subscription sales of $54.8 million, significantly higher than the consensus estimate of $42 million, Sabadra said in the note.
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The beat is “particularly meaningful given last quarter’s stock pullback on weak sales,” he added.
The analyst stated that the following could be “meaningful” catalysts for the stock going forward:
- Strong beat, despite tough comparisons
- Healthy momentum
- Deepening client engagement across the franchise
“The company also pointed to robust demand spanning both its traditional and newer solution offerings,” he further wrote.
Focus on Growth: MSCI’s investments are “set to accelerate the flywheel,” Sabadra said.
With the strategy focusing on accelerating revenue growth rather than margin expansion, the company plans to reinvest incremental gains from operating leverage and improved operational efficiency into product development, client coverage, and innovation, the analyst stated.
He added that the strategic investments include:
- Around $20 million in incremental expenses from four 2026 acquisitions
- About $15-$20 million in stock-based compensation
- Approximately $10-$15 million in additional severance costs reflecting accelerated efficiency initiatives and AI transformation
“Despite elevated expenses, headcount remained flat year-over-year, demonstrating the company’s ability to leverage AI to accelerate innovation while managing expenses strategically,” Sabadra wrote.
While MSCI has the operating leverage needed to generate margin expansion, management continues to see “ample near-term investment opportunities to drive revenue growth and position the company for continued growth in 2027 and beyond,” he added.
MSCI Stock Price Activity: MSCI shares are trading higher by 2.59% at $607.03 at the time of publication on Wednesday, according to Benzinga Pro data.
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