MSCI (MSCI) is well-positioned to benefit from global equity fund flows and rising demand for index-linked products, even as the company pushes out its near-term asset management recovery amid softer Q2 subscription trends, RBC Capital Markets said.
Weaker net new subscription growth and lower retention rates during the quarter, particularly in analytics, sustainability, and climate, were driven by financial budget constraints. The firm said in a Tuesday note that these pressures are weighing on investor sentiment but do not alter its longer-term view.
Despite those near-term headwinds, MSCI's core client segments outside of asset management, including wealth managers, hedge funds, asset owners, and broker-dealers, delivered 11.5% subscription run-rate growth in Q2, a trend RBC expects the company to accelerate.
The firm also pointed to MSCI's dominant position in equity indexing and strong momentum in active ETFs as key structural growth drivers.
RBC has an outperform rating with a $675 price target, calling the recent pullback a compelling long-term buying opportunity.
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