Bloomberg News

Moody’s Rises Most in Two Years as Analytics Help Beat Estimates

October 27, 2011

Oct. 27 (Bloomberg) -- Moody’s Corp. shares rose by the most in two years after demand for its data-analysis services helped third-quarter profit exceed analysts’ estimates.

Net income was 57 cents a share, including a 3-cent tax benefit, New York-based Moody’s said today in a statement distributed by Business Wire. That beat the 48-cent average forecast of three analysts in a Bloomberg survey. Chief Executive Officer Ray McDaniel said in the statement that Moody’s earnings per share for the year would likely be at the “upper end” of $2.38 to $2.48.

As Europe’s debt crisis led companies around the world to sell fewer bonds, cutting demand for credit ratings, Moody’s revenue from its analytics unit, which sells software and consulting services, increased 16 percent to $179.9 million. The company’s overall revenue climbed 4 percent to $531.3 million.

“They defied conventional wisdom this time,” Ed Atorino, an analyst at Benchmark Co. in New York, said today in a telephone interview. “They had a terrific quarter in selling their services.”

Moody’s, the world’s second-largest provider of credit ratings, rose 9 percent to $36.75 in New York, the biggest jump since September 2009.

Bond Sales Fall

With Greece teetering on the edge of default, corporate bond issuance from the U.S. to Europe to Asia fell 37 percent to $566.5 billion in the quarter ended Sept. 30 from $894.4 billion in the same period of 2010, Bloomberg data show.

Moody’s results “were not as bad as feared,” given the “crisis-heavy environment,” William Bird, an analyst at Lazard Capital Markets, wrote in a report today. The company’s net income dropped 4 percent to $130.7 million from $136 million a year earlier.

Revenue rose 17 percent to $82 million at Moody’s structured-finance unit, which rates bonds backed by everything from home mortgages to credit-card bills. The growth came in U.S. commercial real estate and European covered bonds, the company said in the statement.

Revenue at Standard & Poor’s, the largest credit-ratings company, fell 1.8 percent to $409.9 million in the third quarter, the New York-based unit of McGraw-Hill Cos. announced last week.

--Editors: Sharon L. Lynch, Mitchell Martin

To contact the reporter on this story: Zeke Faux in New York at zfaux@bloomberg.net.

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net.


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