MSCI Buys Real Capital Analytics, Expands Real Estate Footprint


MSCI (MSCI Quick QuoteMSCI ) recently announced that it has completed the acquisition of Real Capital Analytics (“RCA”), previously announced on Aug 2. The deal expands MSCI’s footprint in the real estate market.

RCA’s database offers more than $20 trillion of commercial property transactions that are linked to over 200,000 investor and lender profiles. The acquisition now strengthens MSCI’s private real estate capabilities. It also expands MSCI’s global client base for cross-selling opportunities.

The deal will boost top-line growth of MSCI’s All Other segment, which primarily comprises of the Real Estate operating businesses. In second-quarter 2021, All Other revenues were $17 million, up 32.4% year over year.

Acquisitions have enhanced MSCI’s ability to provide climate-risk assessment and assist investors with climate-risk disclosure requirements. The RCA buyout is expected to boost demand for its ESG solution in the real estate market over the long haul.

MSCI’s Prospects Remain Solid

MSCI shares have returned 44.1% year to date compared with the Zacks Business Software Services’ growth of 23.8%.

MSCI Inc Price, Consensus and EPS Surprise MSCI Inc Price, Consensus and EPS Surprise

MSCI Inc price-consensus-eps-surprise-chart | MSCI Inc Quote


The company is benefiting from strong demand for custom and factor index modules, recurring revenue business model and the growing adoption of its ESG solution in the investment process.

Growing passive and index-based investing are driving demand for MSCI’s Index products, which have gained strong traction among client segments like wealth management, banks and broker dealers, and hedge funds. The increasing adoption of MSCI’s products bodes well for the company’s index subscription revenue business.

In second-quarter 2021, Index operating revenues improved 26% year over year to $306 million, primarily driven by growth in recurring subscriptions (up 10.1% year over year) and asset-based fees (up 54.6% year over year).

Additionally, MSCI has a diversified customer base that provides it a significant competitive advantage. At the end of 2020, the company had more than 8000 clients. Index retention rate was a solid 94.4% at the end of second-quarter 2021.

Zacks Rank & Stocks to Consider

MSCI currently has a Zacks Rank #3 (Hold).

Apple (AAPL Quick QuoteAAPL ) , Advanced Micro Devices (AMD Quick QuoteAMD ) and Avnet (AVT Quick QuoteAVT ) are better-ranked stocks in the broader computer & technology sector. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Apple, AMD and Avnet is pegged at 12.7%, 44.6% and 25.4%, respectively.

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