QS Research · Michael Burry's Scion Capital analyst template · 2006
MSCI Inc. (MSCI)
As of 2026-11-08 · 13/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case +14% · downside -23% · upside +29%
MSCI is a high-quality, cash-generative index franchise, but at $641.01 the market already pays 27.0x TTM EV/EBITDA and 33.1x TTM P/E, above every non-MSCI peer on EV/EBITDA and EV/Sales. At the same 27.0x multiple, my base case grows TTM EBITDA of $1.94B by the Q3 2026 organic growth rate of 12.3% to $2.18B, giving $732/share, or +14.2%; a 20% EBITDA decline gives $496/share, or -22.7%, and 25% EBITDA growth gives $825/share, or +28.8%. That is not a deep-value long because the base return is only +14.2% and the multiple already exceeds every peer, nor a short because growth is still double-digit and CEO open-market buying is substantial. I would watch for either a lower entry price or evidence that Q3 2026's FCF decline and Analytics margin pressure are transitory.
Key numbers
- Share price: $641.01
- Market cap: $45.83B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $3.43B
- EV / EBITDA (TTM): 27.0x
- P/E (TTM): 33.1x
The 15 boxes
- ✓ 1. Long-form business notes
MSCI is a five-operating-segment, three-reportable-segment data, analytics and index business that grew revenue from $1.70B in FY2020 to $3.13B in FY2025 while operating income went from $884.8M to $1.71B and operating cash flow from $811.1M to $1.59B on capex of only $39.3M in FY2025. Index is the core: 57.0% of FY2025 revenues, with asset-based fees at 43.1% of Index segment revenue, and one client organization (BlackRock) at 10.8% of FY2025 consolidated operating revenues. The mix has broadened from an ESG/Real Estate/Burgiss structure in FY2020 to Sustainability and Climate, Real Assets and Private Capital Solutions in FY2025, with client count up from over 4,400 to roughly 6,800. Cash generation is being returned aggressively: $2.48B of buybacks in FY2025 against $778.5M in FY2020, leaving total equity of -$2.65B at 2025-12-31 and diluted shares at 76.64M versus 84.52M.
- ✓ 2. Competitive advantage
MSCI looks like a high-quality but contested franchise. FY2025 revenue of $3.13B and operating income of $1.71B (54.6% operating margin, computed from S28), with revenue and operating income up every year FY2020-FY2025, show durable high-margin economics. But the FY2025 10-K lists large index, analytics and sustainability competitors and self-indexing, says clients are generally not required to keep using MSCI indexes, and shows BlackRock at 10.8% of FY2025 revenue, so the advantage is commercial rather than contractual. I would call it a real but not unassailable moat.
- ✓ 3. 10-Q takeaways
Q3 2026 was a clean double-digit quarter: revenue $892.0 million (+12.4%, organic +12.3%), led by Index asset-based fees +24.9%, with Index total revenue +18.1%. Margins held flat rather than expanded — operating margin 56.3% vs 56.4%, Adjusted EBITDA margin 62.2% vs 62.3% — because total operating expenses also rose 12.8% (non-compensation expenses +24.5%). Net income of $351.0 million (+7.9%) is an operating result this quarter, while the nine-month figure of $1,099.0 million (+19.8%) carries an $88.0 million discrete tax benefit booked in Q1 2026 that is not a Q3 item. Cash generation slipped (Q3 free cash flow -8.9% to $385.4 million) even as the company repurchased $552.3 million of stock in the quarter and declared a $2.05 Q4 dividend.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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