Updated with stock price, correction regarding latest regulatory impact on ratings firmNEW YORK ( TheStreet) -- Moody's Corporation's ( MCO) stock is up over 5% on Thursday morning after it reported that its profit rose, helped by higher debt issuances. But the rating agency was cautious in its outlook in the backdrop of more regulatory changes and continued uncertainty in the credit markets. Net income rose 10.7% to $121 million or 51 cents a share from $109.3 million or 46 cents a share a year earlier. Excluding restructuring and legacy cost items, earnings came in at 49 cents a share, beating consensus estimates of 44 cents. Revenue rose 6% to $477.8 million from $450.7 million. Moody's Investor Services, its credit ratings and research arm, saw a 6% increase to $328.6 million from the year-ago quarter, driven by higher corporate debt issuances and public, project and infrastructure finance divisions. The non-ratings business, Moody Analytics, also grew revenues by 6% to $149.2 million from $140.4 a year ago. Operating expenses grew disproportionately higher by 10% to $ 287.3 million, due to higher compensation and legal expenses. Although Moody's has maintained its full year target EPS of $1.75 to $1.85 a share, it expects operating expenses to increase in the mid-to high single digits, with compliance costs related to regulatory changes to come in at $15 million in 2010 and $15 to $25 million in 2011. The market will be looking for more clarity on the impact of new regulations on rating agencies in the company's earnings call on Thursday. A provision in the new finance reform bill deems rating agencies as "experts," akin to auditors, making them liable for their advice. Earlier ratings agencies were absolved of this liability, their ratings considered merely "opinions." The new rule has caused Moody's and its competitors to decline consent for the use of their ratings in the prospectuses of asset backed securities. The stock is up 5.6% at $23.91 in Thursday morning trading. -- Reported by Shanthi Venkataraman in New York.
|Moody's Stock Rating Report (MCO) Rating and Financial Analysis|