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Moody's (MCO) Ups Guidance on Higher Issuance Activity

DNB MCO FISV SPGI

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Moody’s Corporation (MCO - Free Report) has upgraded some aspects of its outlook for 2016 driven by its cost-cutting efforts as well as an increase in issuance activity.

Moody’s now expects GAAP earnings per share to be in the range of $4.70 to $4.80 compared with $4.55 to $4.65 projected earlier. Excluding one-time items, earnings are expected to be in the range of $4.55 to $4.65. Effective tax rate will be in the band of 31% - 31.5% as against 32%-32.5% projected earlier.

MIS revenues from the U.S are now expected to be flat year over year as against expectation of low single digit fall expected earlier.  Global Public, Project and Infrastructure Finance division revenues are now expected to increase 10% compared with a projection of mid-single digit increase earlier.

The rest of the components of the guidance remain intact. For the full year, revenues are expected to be up in low single digits. Further, the company expects capital expenditure of $125 million. Free cash flow is expected to be $1 billion. The company continues to project adjusted operating margin of 45% and expects operating expenses to increase in mid-single digits.

For MIS, revenues are expected to be down in low single digits year over year while for MA, revenues are expected to grow in mid high single digits for 2016.

Moody’s, along with Standard & Poor’s, a unit of S&P Global Inc. (SPGI - Free Report) , holds a dominant position in the duopolistic credit rating industry. It has also gained significant market share in the analytics segment, which boasts names like Dun & Bradstreet (DNB - Free Report) and Fiserv (FISV - Free Report) , based on its strong product portfolio. The company has a diversified customer base, which includes a range of corporate and government issuers of securities as well as institutional investors, depositors, creditors, investment banks, commercial banks and other financial intermediaries.

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