MSCI Inc. (MSCI) stock intrinsic value fair value estimate & owner earnings analysis

MSCI licenses index products, portfolio and risk analytics, sustainability and climate data, and private-asset data to asset managers, banks and asset owners in over 100 countries. In 2025 revenue was $3.13 billion: about 73% recurring subscriptions ($2.28 billion, up 7.8%), about 25% asset-based fees ($771 million, up 17.2%) and the rest one-time items. Subscription retention has run roughly 93-95% for years, and revenue has grown every year since 2016. How we measure earnings. We start from operating cash flow and subtract the swings in working capital, stock compensation (a real cost, so we deduct it) and the capital spending needed to keep the business running. Capitalized software development ($90.5 million in 2025) is treated as a real, ongoing cost alongside conventional capital spending; only a modest slice tied to revenue growth is excluded as growth spending. Per-share owner earnings rose from $2.99 in 2016 to $15.58 in 2024 and $18.02 in 2025. Amortization of acquired intangibles ($169 million in 2025) is a non-cash charge that is added back; we did not lower the earnings level for it and instead let it inform how conservatively growth is treated. We start from $15.58 per share (the middle of 2023-2025, the period since the Burgiss private-assets acquisition), not the 2025 peak of $18.02, because 2025 was lifted by asset-based fees that rise and fall with market values. We deliberately do not credit share buybacks as growth; cash returned is already counted in the earnings stream. Base case: about $325 per share. Owner earnings grow 6% in year one, fading by half a point each year to 1.5% in year ten. Last year owner earnings grew about 12% in total, so this starts below the trailing rate. Growth is credited only from the subscription engine, which has grown for a decade through the 2022 downturn on 94% retention and steady new sales. We leave out price-driven expansion of asset-based fees, new products (for example private-assets and climate offerings) and margin gains. After year ten the franchise, with its index licences embedded in investment products and recurring subscriptions, is assumed to keep earning but erode about 1% a year as competitors and fee pressure chip away. Bear case: about $190. Asset-based fees, which are exposed to market levels and client negotiation, permanently reset about a third lower. The largest client, BlackRock, was 10.8% of revenue in 2025, with 96.5% of that from asset-based fees, and the filing warns clients may seek lower fees. Subscription growth slows to about 2% as retention slips, and roughly $2.2 billion of the $6.25 billion of debt due in 2029-2030 refinances at higher interest. After year ten earnings decline about 3% a year. Bull case: about $440. The business holds its 2025 earnings level of $18.02 per share, and growth starts at 8% (in line with the recent subscription growth) and fades to about 1.25% by year ten. After year ten earnings are held flat. At a 6% discount rate the shares appear worth roughly $190 to $440, with $325 as the central estimate. The margin-of-safety price is about $195, near the bear-case value, because roughly a quarter of revenue is market-linked, one client is concentrated, and debt is high at $6.25 billion (though nothing matures before 2029). What would make this wrong: a sustained cut in ETF index licence fees, a large loss of subscription clients, or heavy competition or in-sourcing by big clients. Note that the second-quarter 2026 filing was not used for the valuation level; first-half 2026 operating cash flow ($678 million versus $638 million a year earlier) is consistent with the normalized level continuing.