Goldman Sachs Raises MSCI (MSCI.US) 3Q Estimates on Strong AUM Trends, Partly Offset by Higher Expenses
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Goldman Sachs reiterates BUY on MSCI with a $672.00 12-month target price (21.1% upside from $554.92) and raises 3Q forecasts based on proprietary high-frequency tracking. Third-quarter average AUM of ETFs linked to MSCI indices grew 34% year over year (versus 40% in 2Q), with market appreciation contributing 23 points and net inflows 11; the tracker covers 95% of MSCI's disclosed AUM and shows a +0.91 correlation with asset-based fee growth. Goldman lifted its 3Q index asset-based fee growth forecast from 13.0% to 20.0%, raising index revenue estimates 2.7% and total 3Q revenue 1.6% (growth forecast up from 9.9% to 11.7%), plus 0.5% for each of 2026-2028. On costs, management indicated expenses trending toward the high $330mn range, partly on severance, with full-year EBITDA expenses possibly near the high end of guidance; Goldman trimmed 3Q EBITDA margin 30bps to 61.5% and 2026/2027/2028 to 60.9%/61.2%/61.6%, while modestly raising 2026-28 EPS to $19.62/$23.05/$26.81. Demand indicators remain healthy—MSCI-linked ETD volumes +7% and global fund count +8% year over year—though new fund launches fell 24%. GS sees pricing power, proprietary data and diversified clients (~43% of subscription run-rate from banks, brokers, hedge funds, wealth managers and asset owners) supporting re-acceleration toward low-double-digit organic growth and low-to-mid-teens EPS growth.
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