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Why MSCI Stock Could Surge This Year

MSCI (MSCI) provides investment and analytics tools to ESG driven investors. I am bullish on the stock.

ESG Popularity

MSCI stock is gaining significant traction due to investors’ bias to use ESG data to assist their investment decision-making process.

ESG stands for Environmental, Social, and Governance; it’s a proxy to the previously occupied socially responsible investment framework in that it seeks profitability along with good deeds instead of scouting for “investing for the greater good” assets only.

Data shows that ESG-mandated hedge funds have outperformed non-ESG hedge funds over the past three, five, and 10 years. This is because ESG companies are driven to report more reliable accounting data to shareholders, which contributes to market efficiency and improves the reliability of valuation models.

Furthermore, ESG focused entities may receive subsidies from governments for environmental and social initiatives, which in turn improves firms’ bottom-line earnings and consequently shareholder value.

MSCI’s Big Value Add

Many of you may be asking why all of the previously mentioned ESG factors play a role in MSCI stock’s performance. Well, MSCI, along with Sustainalytics, are the two prominent ESG data providers at the moment; most institutional funds are making use of MSCI as their provider of state-of-the-art ESG insights, which explains why the company has a 22.3% five-year CAGR in net income.

Shifting MSCI’s market position won’t be an easy task as ESG data as the company has established itself well ahead of the curve, and the knock-on effect of the firm’s market share could directly positively influence MSCI’s stock price.

Growth Prospects

MSCI stock has attractive growth prospects. Forward revenue, EBITDA, and EPS are all predicted to grow by 14.1%, 16.5%, and 20.2% over the next year.

With most of MSCI’s forecasted key metrics pointing upwards, it could almost certainly be concluded that we’re looking at an undervalued stock here.

Wall Street’s Take

Turning to Wall Street, MSCI has a Moderate Buy consensus rating, based on two Buys and one Hold assigned in the past six months. The average MSCI price target of $707.67 implies 35.9% upside potential.

Concluding Thoughts

MSCI is in popular demand at the moment. The company has situated itself as one of the market leaders in ESG data providing. The fact that ESG is gathering popularity by the day could assist the stock in reaching significant heights.

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