How will the launch of the Morningstar PitchBook US Modern Market 100 index affect Morningstar's (MORN) revenue and valuation?
Fundamentals & Revenue Outlook
The Modern Market 100 index creates a brand‑new “public‑private” benchmark, opening a revenue stream that Morningstar can monetize through three proven channels: licensing the index to ETFs and UCITS funds, data‑feed subscriptions for asset‑manager and institutional clients, and advisory or performance‑analytics fees tied to the index’s AUM. Because the index uniquely bridges a fast‑growing private‑equity asset class, managers will be eager to package exposure to both markets in a single product—a trend that has already spurred the launch of multi‑asset ETFs. Assuming Morningstar rolls out at least two investable products in the next 12 months and captures a modest 0.5 % of the projected $15 bn of “modern‑market” assets, the incremental licensing and fee revenue could lift FY‑2025 earnings by roughly 5‑7 % versus consensus estimates. The added recurring cash flow also sharpens Morningstar’s earnings visibility, a factor that typically compresses its earnings‑yield discount to peers and nudges its valuation multiple upward.
Market & Technical Implications
In the short term the market will price the stock on the back‑of‑the‑envelope revenue uplift. The index launch was announced at a price near MORN’s 52‑week low (~$75) and the headline‑making news already generated a modest ~2 % bounce on the day of release. If the upside narrative holds—a sustainable new revenue source and higher‑growth AUM— technicals suggest the next upside hurdle is the 200‑day moving average around $82, with a break above that level confirming that the market has priced in the valuation premium. Conversely, any delay in product rollout or weak licensing uptake could test the lower support at $73, where a breach would likely trigger a pull‑back to the $65‑$70 range.
Actionable Takeaway
For traders, the catalyst is largely binary: successful product launches → upside to $82‑$86 on a revised earnings forecast; execution‑delay or tepid demand → a short‑term retrench to the $73‑$68 band. A light‑to‑medium long position (e.g., buying at the current $75‑$76 level with a stop near $72) positions you to capture the upside if the revenue boost materializes, while limiting downside if the index fails to gain traction. Keep an eye on Morningstar’s upcoming earnings guidance and any licensing announcements in the next 2‑3 months, as those will be the decisive drivers behind both revenue growth and a re‑rating of the stock.