Moody's Corporation (NYSE:MCO) saw its shares edge down 0.1% to $418.49 in Wednesday's premarket session, stabilizing after a significant 6.8% decline on Tuesday. The ratings agency's stock movement comes amid broader pressure on financial data and analytics firms.
Sector-Wide Pressure
The selloff was triggered after rival S&P Global issued a 2026 adjusted earnings-per-share forecast between $19.40 and $19.65, falling short of the analyst consensus estimate of $19.94. S&P's stock plummeted 9.7% in response, reaching its lowest level in over two years. Other firms in the sector, including Verisk and Nasdaq, also closed lower.
Investors are scrutinizing whether emerging artificial intelligence tools could undermine the pricing power of traditional analytics and research products. However, S&P Global's leadership expressed a contrasting view, with CEO Martina Cheung stating on the earnings call that "AI really is a net tailwind for the business."
Key Business Levers in Focus
Moody's revenue relies on two primary sources: ratings fees, which fluctuate with capital market activity, and more stable subscription revenue from its data and analytics division. Market participants are keenly awaiting signals on the pace of debt issuance—a critical driver for ratings revenue—and the resilience of analytics subscription renewals.
The company, alongside S&P Global, recently adjusted Stellantis's credit rating to the lowest tier of investment-grade, citing concerns over profitability and cash flow. While this specific action isn't driving equity volatility, a sustained downturn in new debt issuance or a material shift in how the market prices the AI threat could prompt a broader valuation reassessment for Moody's.
All eyes are now on Moody's scheduled fourth-quarter and full-year earnings report, set for release before the market opens on February 18, with a conference call to follow at 9:00 a.m. ET.
