Moody's (MCO) "optimistic" forecast for 2025 leaves "little room for error," analysts at UBS said in a note Tuesday, adding that they don't see much upside currently due to the company's elevated valuation.

The business analytics and assessment firm reported Q4 earnings that beat Wall Street estimates last week. It also issued a stronger-than-expected full year adjusted earnings outlook and announced a new efficiency program expected to reduce spending by roughly $250 million to $300 million per year, improving margins and driving profitability at the company over time.

The UBS analysts, however, said while Moody's should have little problem keeping up with its longer-term goals, its 2025 guidance "could be hard to achieve."

The UBS analysts reiterated their neutral rating for the stock while boosting their price target to $540 from $510 per share previously. The new price target reflects a higher multiple of 35 times the analysts' projected fiscal 2026 earnings of $15.45 per share compared with their prior multiple of 33 times expected 2026 EPS of $15.59, UBS said.

The analysts also trimmed their earnings estimate for 2025 by 0.5% to $13.88 per share, with the expected slowdown for revenue coupled with the company's projections for an increased share count and a higher tax rate eroding its shorter-term prospects, UBS said.

Price: 516.18, Change: -6.66, Percent Change: -1.27