S&P Global's (SPGI) mid-term guidance is likely conservative and is set up for a beat due to factors like strong issuance tailwinds and high incremental margins, RBC Capital Markets said.

The company's mid-term earnings per share outlook was reduced to double digits from the previously stated low-to-mid teens, and its target for 50 basis points to 75 basis points of margin expansion "also fell below expectations," the brokerage said in a Thursday note.

RBC also pointed out that S&P Global did not provide a mid-term segment margin outlook and will stop releasing annual segment margin guidance.

Meanwhile, S&P Global's refinancing walls over the next three years total $8.2 trillion, which is 26% above the company's three-year average of $6.5 trillion and 9% above the refinancing wall for 2024. RBC said the trend indicates "significant growth potential" in the credit ratings business.

The investment firm noted that S&P Global generates about 95% of its revenue from proprietary data, which is a "critical competitive advantage," and that the company's AI initiatives rely on that proprietary, quality-assured data, which is a "key differentiator."

RBC has an outperform rating on S&P Global and a $620 price target.

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