Mergers Market and Ratings Demand Drive Bullish Views on Moody's (MCO)

Moody’s Corporation (NYSE:MCO) is one of the 12 oversold financial stocks to invest in according to hedge funds.

On January 13, the rating on Moody’s Corporation (NYSE:MCO) was upgraded from Neutral to Outperform by Kazuya Nishimura from Daiwa. The analyst estimated a price target of $590, which yields an upside potential of more than 38% at the prevailing level.

Nishimura’s rating upgrade is based on Daiwa’s upward adjustments to the earnings forecasts for Moody’s Investors Service segment. Such adjustments reflect upon a more conducive issuance environment, uptick in activity across the merger market, and an elevating demand for credit ratings within private credit. In terms of medium-term profit growth, the firm expects Moody’s Corporation (NYSE:MCO) to outperform S&P Global.

On February 4, RBC Capital Markets shared its views on the recent GenAI-related selloff in Information Services and Exchanges stocks, which presents a compelling buying opportunity rather than a fundamental threat. The firm highlighted Moody’s Corporation (NYSE:MCO) as a stock likely to attract investor attention, citing the company’s limited exposure to GenAI disruption due to exclusive data assets and strong client integration. The firm also noted that the company has strong and lasting competitive advantages that AI models cannot easily duplicate, particularly in businesses such as credit ratings, indices, and risk analytics, which remain largely GenAI resistant.

Moody’s Corporation (NYSE:MCO) is an integrated risk assessment firm with global operations. It offers various products and services, such as credit ratings, economic data, risk management, analytics, and credit models, to support financial market participants. It also provides SaaS solutions to support banking, insurance, and KYC workflows.

While we acknowledge the potential of MCO as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.