MSCI INC. (MSCI): what the price requires
At today's price, MSCI INC. (MSCI) is priced for +26.8% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/MSCI
Headline
| Field | Value |
|---|---|
| Ticker | MSCI |
| Company | MSCI INC. |
| Current price | $618.52/sh |
| Composition | Recurring subscriptions 73% / Asset-based fees 25% / Non-recurring 3% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 16.5% |
| Operating margin today | 54.0% |
| Margin compression implied | -37.5pp |
| Implied growth | 26.8% |
| Multiple paid | 30x operating income |
The operating-margin requirement is derived from the framework's value band at year 11, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 9.3% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.6pp.
How unusual the bet is: high
| Reference | Value |
|---|---|
| vs own history | +1.68σ |
| cohort percentile (of 210 peers) | 81 |
| sustained it ~5 years at this level | 28% |
| implied end-window share | 0% |
Valuation X-Ray
Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | — | 0 | — |
| Earnings | 4.24x | 3 | expensive |
| Relative | 1.90x | 2 | expensive |
| Growth | — | 0 | — |
Families that call it expensive: Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.2%); the inversion above states its own rate.
Per-Model Detail (n=5)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $555.34 | 1.11x | no | FCF base $1.6B, growth 11% (input: historical growth), terminal g 4.0%, WACC 8.2%, 6yr projection |
| DCF Exit Multiple | Growth | $686.93 | 0.90x | no | Exit EV/EBITDA: 26.4x / 28.4x / 30.4x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $426.96 | 1.45x | yes | P/E 24.32x (blended: static sector reference 20x + trailing (TTM) 34x), scenarios: 20.1x / 24.3x / 28.5x (bear / base = reference held flat / bull), EV/EBITDA 18.31x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | — | — | no | — |
| Two-Stage Excess Return | Asset | — | — | no | — |
| Discounted Future Market Cap | Growth | $308.60 | 2.00x | no | Rev $3.2B, growth 11% (input: historical growth; tapered), Terminal P/S: 6.6x / 8.0x / 9.4x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $360.57 | 1.72x | no | EPS $17.51, growth 21% (input: historical EPS growth), PEG=1.67 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $99.98 | 6.19x | no | Normalized EBIT (5y avg op income, one-time charges added back) $1.42B × (1−21%) / WACC 8.2% → EPV (no growth) |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | — | — | no | — |
| EV/EBITDA Relative | Relative | $262.46 | 2.36x | yes | EBITDA $1.82B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $145.89 | 4.24x | yes | FCF $1562.9M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $128.29 | 4.82x | yes | SBC-adj FCF $1.44B (FCF $1.56B − SBC $0.12B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $564.99 | 1.09x | yes | EPS $17.51 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $66.20 | 9.34x | no | Revenue $3.24B × sector P/S 1.5x |
| PEG Fair Value | Relative | $540.85 | 1.14x | no | EPS $17.51 × (PEG 1.5 × growth 20.6% (input: historical EPS growth)) → PE 30.9x |
| Earnings Yield | Earnings | $189.30 | 3.27x | no | EPS $17.51 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $6.0b |
| Net debt / NOPAT (after-tax) | 4.46x |
| Net debt / operating income (pre-tax) | 3.53x |
| Interest coverage | 7.9x |
| Share count CAGR (buyback) | -2.8% |
| Burning cash | no |
Bullet Takeaways
The single decisive metric is the Run Rate, the annualized value of contracted revenue. It reached $3.36 billion at the end of Q1 2026, up 12.7%, and the retention rate held at 95.4%. That recurring engine is what the premium price is really paying for.
The economics are exceptional. MSCI runs a roughly 55% operating margin on index licensing, analytics, and ESG data, with high single-digit organic subscription growth and asset-based fees at record run-rate levels.
The valuation is demanding. At $581.29 the market pays about 28x operating income, the very top of the data-and-analytics peer group, implying roughly 25% operating growth for five years, a pace only about 29% of comparable fast-growers have sustained.
Bull Case
Anchor on the one number that decides this thesis: the Run Rate. MSCI's Run Rate, the annualized value of its contracted subscription and fee revenue, reached $3.357 billion at the end of Q1 2026, up 12.7%, and the retention rate held at 95.4%. For a subscription-and-licensing business, Run Rate plus retention is the whole game, because it converts directly into next year's revenue with almost no incremental cost. The filing describes how cleanly that machine works, recognizing "the annualized value of newly executed recurring Client Contracts" immediately and removing cancellations the same way (FY2025 10-K, accession 0001408198-26-000011). A 95% retention rate on a $3.36 billion base is a near-annuity.
The margin shows why the franchise is special. MSCI runs a roughly 55% operating margin because indexes and data, once built, are licensed over and over at trivial marginal cost. Q1 2026 revenue rose 14.1% to $850.8 million, with recurring subscription revenue up $47.6 million and asset-based fees up $47.1 million as ETF assets tracking MSCI indexes hit a record asset-based-fee run rate. The product suite spans "index licensing, analytics, ESG and sustainability data, private asset benchmarks," a diversified set of recurring revenue streams that the filing shows growing across "asset manager, insurance and wealth manager client segments" and private assets up 9.5% (accession 0001408198-26-000011).
The model compounds with the markets it measures. As global assets grow and shift toward indexed products, MSCI's asset-based fees scale with them, while subscriptions grow with new clients and modules. The company also returns capital, reducing the share count about 2.8% a year, and interest coverage near 7.7x supports its leverage. The Ben Graham Formula method lands at $565, essentially at the price, reflecting the durable earnings power. For a buyer who believes the Run Rate keeps compounding at high retention, the bull case is one of the highest-quality recurring-revenue franchises in finance, where the decisive metric keeps moving the right way.
Bear Case
The disconnect to face is qualitative before it is numeric: MSCI is priced as a flawless compounder while two of its core revenue engines are more exposed and more contested than the premium implies. The asset-based-fee line, which the bull case celebrates as a record, rides the assets under management in ETFs that track MSCI indexes, and those flows move with markets the company does not control. A market drawdown shrinks the asset base and the fees on it at the same time, turning a tailwind into a headwind without any change in MSCI's own execution. The smooth subscription Run Rate masks a line that is inherently market-sensitive.
The more durable concern is fee pressure flowing upstream. The ETF industry competes on cost, and the filing is candid that "competition is intense among our clients that offer or manage indexed investment products, including ETFs, and low fees are one of the competitive differentiators," with the product's total expense ratio determining the fee MSCI collects (FY2025 10-K, accession 0001408198-26-000011). When clients cut their ETF fees to win assets, MSCI's take on those assets compresses. The filing also warns that barriers "or declining in many markets" are "supporting new competitors," naming "more broker-dealers, data suppliers, credit rating agencies, analytics firms, technology" players entering its space (accession 0001408198-26-000011). The index oligopoly is not as impregnable as a 28x multiple assumes.
The price leaves no room for either pressure to bite. At $581.29 (June 27, 2026) MSCI trades at the very top of its data-and-analytics peer distribution, implying roughly 25.5% operating growth for five years, a pace only about 29% of comparable fast-growers have sustained. The methods that price current cash are far below: FCF yield at $146, SBC-adjusted FCF yield at $128, EV/EBITDA relative at $262, and even the relative-valuation method at $415. Net debt sits at about 3.4x operating income. The bear case is the price-to-fundamentals disconnect: a magnificent business, but one whose asset-based fees are market-driven and whose index economics face quiet fee compression, priced as if neither risk exists.
Valuation
At $581.29 MSCI trades around 28x company-wide operating income, which inverts into an implied operating-growth assumption of about 25.5% a year over five years, computed at a 9.3% cost of capital. That multiple sits at the very top of the data-and-analytics peer distribution, well beyond the upper quartile, and only about 29% of comparable fast-growers have sustained this pace for five years, so the reverse solve labels the assumption high. The current operating margin is about 55.4%, exceptional for any business, and the price is paying for that margin to fund years of continued growth.
The X-ray methods sit almost entirely below the price, which is the signal. The relative method lands at $415, EV/EBITDA relative at $262, and the FCF-yield methods at $128 to $146, all well under $581. The one method that reaches the price is the Ben Graham Formula at $565, which credits a 15% growth input. The reverse-DCF reasonable band is unusually tight, $535 to $581 with a base at $581, reflecting how much of the value is already in the price. The peer cohort of S&P Global, FactSet, ICE, and Verisk frames MSCI as the highest-multiple name in a high-multiple group.
The synthesis is a premier franchise priced for premier execution. The recurring Run Rate and 95% retention justify a premium multiple, and the Ben Graham method near the price says the earnings power is real. But every method that prices the current cash stream, rather than extrapolating growth, lands far below, and the implied growth rate is demanding even for MSCI. The gap between those methods and the price is the durability premium the market assigns to the index and data oligopoly. It is one of the more defensible premiums in the market, but it is a premium, not a discount, and the price assumes the Run Rate keeps compounding while asset-based fees and index economics stay unpressured.
Catalysts
The Q1 2026 print, reported April 21, 2026, was a beat that lifted the stock about 4 to 5%: operating revenue up 14.1% to $850.8 million (13.3% organic), total Run Rate of $3.357 billion up 12.7%, a 95.4% retention rate, and a record asset-based-fee run rate driven by the index business (MSCI investor relations; Foreign Policy Journal). Recurring subscription Run Rate grew $203.3 million and asset-based-fee Run Rate grew $174.8 million.
The forward set is about sustaining the recurring engine. The swing factors into the coming prints are organic subscription Run Rate growth and whether retention holds above 95%, the trajectory of asset-based fees as a function of market levels and ETF flows, fee compression on indexed products as clients compete on cost, growth in the private-assets and analytics segments, and the pace of new-client wins against emerging competitors. Because asset-based fees ride market levels, a sustained drawdown is the clearest near-term risk, while continued index-linked AUM growth is the clearest tailwind.
Sources: MSCI Q1 2026 results (MSCI investor relations; MSCI 8-K, 2026); Foreign Policy Journal and MarketScreener earnings coverage (2026).
Peer Cohorts (Per Segment, With Filing Citations)
Index / Analytics / Sustainability and Climate (reported)
- SPGI (S&P Global Inc.)
- (no filing in the citation store)
- FDS (FACTSET RESEARCH SYSTEMS INC.)
- (no filing in the citation store)
- ICE (Intercontinental Exchange Inc)
- (no filing in the citation store)
- VRSK (Verisk Analytics, Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.