Last Update 17 Nov 25
Fair value Decreased 0.56%FDS: AI Adaptation And Leadership Will Drive Improved Market Positioning Ahead
Analysts have slightly lowered their price target for FactSet Research Systems, now expecting $335.94 per share compared to $337.81 previously. The change is attributed to continued investment-related margin pressures and evolving competitive dynamics, as highlighted in recent research notes.
Analyst Commentary
Recent research reflects a mix of optimism and caution surrounding FactSet Research Systems. Analysts have offered varied perspectives on the company's current valuation, growth potential, and execution risks as competitive dynamics and ongoing investments shape the outlook.
Bullish Takeaways- Bullish analysts highlight the company's "sticky franchise," noting that the stability and long-term nature of FactSet's client relationships are underappreciated by the market at current share levels.
- Several believe the stock has sufficiently priced in downside risk following share underperformance year to date, suggesting the risk-reward profile could be attractive at these levels.
- FactSet's recent integration of artificial intelligence and its swift adaptation to new technological trends indicate an ability to respond effectively to industry change.
- The expertise of new leadership and a strategic shift toward growth areas such as wealth management are seen as potential catalysts for improved execution and future upside.
- Bearish analysts express concern that ongoing investments are likely to pressure FactSet's margins in the near term, impacting profitability into fiscal 2026.
- Some point to uncertainty over how long the current investment phase will last and question whether these efforts will drive meaningful revenue acceleration, versus simply maintaining the company's current competitive position.
- There is caution around FactSet's guidance for the coming fiscal year, which is seen as conservative and below market expectations.
- Competitive pressures, especially regarding artificial intelligence, are cited as headwinds that could limit FactSet's ability to expand margins and grow market share.
What's in the News
- Macrobond announced a strategic integration with FactSet, enabling Macrobond users to directly access FactSet's equity, ETF, fundamentals, consensus estimates, and market aggregates data within the Macrobond platform (Client Announcements).
- FactSet launched the general availability of IntelligentCross' JumpStart functionality within the Portware EMS, making it the first among competitors to offer direct buy-side integration for Jefferies' liquidity and leveraging AI for improved execution in US equities (Product-Related Announcements).
- FactSet issued fiscal 2026 earnings guidance, projecting GAAP revenues between $2,423 million and $2,448 million, diluted EPS from $14.55 to $15.25, operating income from $720 million to $750 million, and net income from $550 million to $577 million (Corporate Guidance).
- The company completed major share buybacks, repurchasing a total of 682,308 shares for $299.48 million since September 2024 (Buyback Tranche Update).
- FactSet amended and restated its bylaws to clarify director election procedures, including resignation processes for incumbent directors not receiving majority votes and a carve out for contested elections (Changes in Company Bylaws/Rules).
Valuation Changes
- Consensus Analyst Price Target: Decreased slightly from $337.81 to $335.94 per share.
- Discount Rate: Increased marginally from 8.41% to 8.48%.
- Revenue Growth: Essentially unchanged, moving fractionally from 5.39% to 5.39%.
- Net Profit Margin: Remained stable, inching up from 25.36% to 25.36%.
- Future P/E: Dropped modestly from 21.86x to 21.78x.
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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