Last Update 03 Nov 25
Fair value Decreased 0.092%Analysts have modestly lowered their price target for FactSet Research Systems, reducing the fair value estimate by less than one dollar to approximately $337.81. Recent research highlights a mix of AI-driven competitive pressures and the company's resilient industry position.
Analyst Commentary
Recent street research on FactSet Research Systems reveals a mix of optimism and caution among analysts, highlighting diverging perspectives on valuation, industry trends, and the company’s growth outlook.
Bullish Takeaways- Bullish analysts highlight FactSet’s “sticky franchise” and strong client retention. They suggest the platform’s value is underappreciated at current share prices.
- Some believe the market overstates negative impacts from artificial intelligence disruption. FactSet has shown capability to integrate AI into its offerings rapidly.
- The company’s new leadership is expected to bring strategic shifts, with a focus on opportunities in wealth management and exploring new segments where incumbents may be disrupted.
- Despite the stock’s recent underperformance, several analysts see the downside risk as already priced in. This creates a more favorable risk-reward balance for long-term investors.
- Bearish analysts cite recent reductions in price targets, reflecting concerns about lower margin guidance and uncertainty over the duration and payoff of the company’s investment phase.
- There are worries that additional investments may be necessary just to maintain FactSet’s competitive position. This could lead to a subdued long-term margin outlook.
- Management’s guidance has been viewed as conservative, and some analysts believe competitive pressures from AI-driven rivals could intensify margin pressures in upcoming years.
- Broad underperformance in peers after FactSet’s results has prompted further skepticism around the timing and impact of strategic execution, especially heading into fiscal 2026.
What's in the News
- Macrobond integrated FactSet's equity and ETF datasets, combining top-down macroeconomic insights with detailed security-level intelligence for enhanced investment strategies (Client Announcements).
- FactSet's Portware execution management system became the first to directly offer IntelligentCross' JumpStart functionality, providing buy-side traders access to advanced, AI-powered equity liquidity with improved confidentiality (Product-Related Announcements).
- The company completed the repurchase of 682,308 shares, representing 1.8% of shares outstanding, for a total of $299.48 million under the buyback announced in September 2024 (Buyback Tranche Update).
- FactSet issued fiscal 2026 guidance, projecting GAAP revenues of $2,423 to $2,448 million and GAAP diluted EPS of $14.55 to $15.25 (Corporate Guidance - New/Confirmed).
- FactSet announced partnerships and data integrations with firms such as Hebbia and J.P. Morgan, further expanding its offering of trusted market datasets and analyst research for clients (Client Announcements).
Valuation Changes
- Fair Value Estimate: Lowered marginally from $338.13 to $337.81, reflecting a reduction of less than $1.
- Discount Rate: Increased slightly from 8.40% to 8.41%, suggesting a modest rise in the expected rate of return.
- Revenue Growth: Remained essentially unchanged at approximately 5.39%.
- Net Profit Margin: Edged higher, moving from 25.35% to 25.36%.
- Future P/E Ratio: Declined from 22.51x to 21.86x, indicating a modest reduction in expected valuation multiples.
Key Takeaways
- Integration of acquisitions and new GenAI products is expanding service offerings and supporting revenue and ASV growth.
- Enhanced data solutions and operational productivity improvements are poised to sustain margins and bolster future revenue.
- Rising technology costs and asset management challenges may pressure FactSet's margins and hinder growth, with uncertain market conditions affecting revenue consistency.
Catalysts
About FactSet Research Systems- Operates as a financial digital platform and enterprise solutions provider for the investment community worldwide.
- FactSet is integrating new acquisitions like Irwin and LiquidityBook, adding immediate cross-sell opportunities and expanding services across buy-side and banking workflows, which will support revenue growth.
- The launch of new GenAI products, including Pitch Creator and conversational API, is expected to provide additional services that drive adoption and increase ASV growth, positively impacting future revenue.
- The company is implementing strategic initiatives in its wealth management segment, securing partnerships like the UBS deal, and this broad market share in the wealth sector should contribute to sustained ASV growth.
- FactSet is increasing its focus on data feeds, benefiting from strong demand for high-quality data solutions, which should bolster future revenue and margin expansion through increased enterprise-level sales.
- Focus on operational productivity, such as reducing third-party content costs and enhancing workforce efficiency through automation, underpins the company's confidence in maintaining its operating margins despite recent acquisitions.
FactSet Research Systems Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming FactSet Research Systems's revenue will grow by 5.7% annually over the next 3 years.
- Analysts assume that profit margins will increase from 23.3% today to 27.0% in 3 years time.
- Analysts expect earnings to reach $730.7 million (and earnings per share of $20.08) by about September 2028, up from $532.9 million today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 27.6x on those 2028 earnings, up from 26.5x today. This future PE is greater than the current PE for the US Capital Markets industry at 26.7x.
- Analysts expect the number of shares outstanding to decline by 0.48% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 8.33%, as per the Simply Wall St company report.
FactSet Research Systems Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- The slowing price increases tied to lower CPI levels could negatively impact FactSet's revenue growth, as demonstrated by a nearly $7 million headwind to ASV growth this quarter.
- Persistent challenges in the asset management and banking sectors, including ongoing cost rationalization and budget tightening, pose risks to revenue and retention which could unfavorably affect net margins.
- The market environment remains uncertain, particularly for banking, which has been a drag on growth; this uncertainty may continue to suppress revenue growth despite potential wins with new products.
- Increased technology expenses, noted as 31% higher mainly due to greater cloud and software costs, could pressure operating margins and require significant cost efficiencies elsewhere to offset.
- The execution risks tied to international expansion, given mixed results in regions like EMEA, could lead to inconsistent revenue performance and impact overall growth expectations.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $428.375 for FactSet Research Systems based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $500.0, and the most bearish reporting a price target of just $355.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.7 billion, earnings will come to $730.7 million, and it would be trading on a PE ratio of 27.6x, assuming you use a discount rate of 8.3%.
- Given the current share price of $372.86, the analyst price target of $428.38 is 13.0% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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