MCO - Moody's boosts 2023 earnings guidance trims free cash flow outlook

2023-04-25 09:29:44 ET

Moody's ( NYSE: MCO ) boosted its full-year guidance for adjusted EPS after Q1 earnings topped Wall Street expectations, but trimmed its free cash flow outlook as it sees expenses rising more than initially forecast.

The company, which provides credit ratings and risk assessment services and products, now expects to earn $9.50-$10.00 per share in 2023, up from its previous guidance range of $9.00-$9.50.

It expects revenue to rise in the mid-to-high-single-digit percentage range, unchanged from its previous outlook. Guidance for expenses increased to the mid-single-digit percentage range from the low-single-digit range it expected in January.

Free cash flow is now expected at $1.4B-$1.6B for the year, down from its previous guidance of $1.7B-$1.9B. Visible Alpha consensus is $1.59B for 2023 free cash flow.

Moody's ( MCO ) still expects to buy back ~$250M of its shares during the year.

Long-term revenue growth fundamentals for Moody's Investors Service, the part of the company that rates debt, remains intact, the company said.

Q1 adjusted EPS of $2.99, beating the $2.22 consensus, rose from $1.60 in Q4 2022 and from $2.89 in Q1 2022.

Q1 revenue of $1.47B, exceeding the $1.43B consensus, improved from $1.29B in the prior quarter and dropped from $1.52B in the year-ago period. Moody's Analytics revenue rose 6% Y/Y to $737M, while Moody's Investors Service revenue dropped 11% Y/Y.

"Ongoing uncertainty around inflation, interest rates, and recessionary concerns broadly impacted credit markets, constraining issuance in most sectors," the company said.

Conference call at 12:30 PM ET.

Earlier, Moody's ( MCO ) non-GAAP EPS of $2.99 beats by $0.77, revenue of $1.5B beats by $70M.

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