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Moody's Corporation raises FY 2012 guidance above Street expectations



Moody's Corporation (NYSE:MCO) Wednesday announced it is raising its full-year earnings guidance and lifted full-year revenue forecast, with predictions ahead of Street expectations.

Moody's provides credit ratings, research, tools and analysis that contribute to transparent and integrated financial markets. 

Overall, the company said it now expects full-year 2012 revenue to grow approximately 12 to 13 per cent, compared its previous guidance for a revenue increase in the low-double-digit percentage range.

Analysts according to Thomson Reuters are expecting revenue of $2.54 billion.

Moody's said its adjusted earnings per share (EPS) are expected to be in the range of $2.70 to $2.80. That excludes an approximate six-cent-per-share benefit related to the “favorable resolution of a legacy tax matter” in the third quarter of 2012.

The firm’s prior guidance was for earnings at the higher end of a $2.62 to $2.72 per share range.

Non-adjusted EPS guidance range for the full-year 2012 is now $2.76 to $2.86, said the company.

Analysts are expecting EPS of $2.73.

The corporation said full-year 2012 expenses are now also expected to increase 12 to 13 per cent, while operating margin is still projected to be about 39 per cent. The company’s effective tax rate is now anticipated at 32 per cent.

For the global Moody’s Investors Service (MIS) business, revenue for the full-year 2012 is now expected to increase in the high-single-digit percent range. 

Within the U.S., MIS revenue is now expected to increase in the mid-teens percent range, while non-U.S. revenue is still expected to increase in the low-single-digit percent range, compared to a previous forecast of an increase in the mid- to high-single-digit per cent range.

Corporate finance revenue is now projected to grow in the mid-teens percent range, and revenue from structured finance is now expected to increase in the mid-single-digit percent range. 

Moody’s said revenue from financial institutions is still expected to be flat to slightly up, while public, project and infrastructure finance revenue is now expected to increase in the low-teens percent range.

For Moody’s Analytics, 2012 revenue is still expected to increase in the high-teens per cent range. In the U.S., the company said MA revenue is still expected to increase in the high-teens to 20 per cent range, while non-U.S. revenue is now expected to increase in the mid- to high-teens per cent range. 

The company said revenue growth is still projected in the mid-single-digit per cent range for research, data and analytics and in the low 20’s per cent range for enterprise risk solutions, reflecting its late 2011 acquisition of Barrie & Hibbert as well as growth in the base business.

Professional services revenue is still projected to grow by approximately 75 per cent.

Moody’s said it now expects full-year share repurchases of approximately $300 million, subject to available cash, market conditions, and other ongoing capital allocation decisions.

The company noted that its outlook for 2012 is based on assumptions about many macroeconomic and capital market factors, including interest rates, corporate profitability and business investment spending, merger and acquisition activity, consumer borrowing and securitization, and the amount of debt issued. 

“There is an important degree of uncertainty surrounding these assumptions, especially as they relate to Europe, and, if actual conditions differ, Moody's results for the year may differ materially from the current outlook,” it said in a recent release.

Moody's Corp. is the parent company of Moody's Investors Service, which provides credit ratings and research covering debt instruments and securities, and Moody's Analytics, which offers software, advisory services and research for credit and economic analysis and financial risk management. 

The company reported revenue of $2.3 billion in 2011.

Shares of Moody’s were up 0.80 per cent as at about 9:30 a.m. ET, trading at $42.84.


Quick facts: Moody's Corporation

Price: 280.49 USD

Market: NYSE
Market Cap: $52.65 billion

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