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Moody's: Today's Financial Loser

After the Department of Justice filed suit against Standard & Poor's, UBS analyst Alex Kramm said in a report that the lack of a similar lawsuit against Moody's "suggests that the DOJ could either 1) have specific evidence to make a case against MHP, or 2) MCO could be targeted at a later time." Kramm also said a lawsuit against Moody's "could take years to play out."

Piper Jaffray analyst Peter Appert on Friday reiterated his "overweight" rating on Moody's, with a price target of $59, saying in a note that "we continue to like the risk/reward of MCO shares based on strong earnings momentum, impressive secular growth prospects, fading regulatory concerns and what we believe should be manageable litigation risk."

"We believe upside in MCO shares may be limited until we get clarity over the weightiness of the DoJ's evidence against S&P and the applicability of the FIRREA rule to rating agencies," Appert wrote.

Appert also expects the legal risk to Moody's to be "manageable" because "after four years of extensive discovery the long sought 'smoking gun' that would prove fraud has failed to materialize."

-- Written by Philip van Doorn in Jupiter, Fla.

MCO Chart MCO data by YCharts

Interested in more on Moody's Corp.? See TheStreet Ratings' report card for this stock.


>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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