FactSet Research Systems (FDS): Examining Valuation After UBS Upgrade and Recent Earnings Shake-Up

If you are weighing what to do with shares of FactSet Research Systems (FDS) after a turbulent stretch, you are not alone. The company's stock is suddenly drawing fresh attention, thanks to a surge after UBS upgraded it to 'Buy' following a steep sell-off triggered by mixed fourth-quarter earnings and a lukewarm outlook. UBS pointed to FactSet's mission-critical financial data offerings, nimble adoption of AI, and record-breaking quarterly subscription growth as signs that recent market pessimism may have gone too far. At the same time, the company is rolling out enhanced product features, including broader access to analyst research, giving investors something new to consider. All this comes as FactSet's share price has sunk nearly 39% year-to-date, continuing a downward trend over the past year and three years as well. While recent performance stings, momentum may be shifting. Just last week, the stock jumped 3% after the UBS call. Meanwhile, FactSet has been active behind the scenes, buying back shares, updating its guidance, and reporting improving annual revenues and profit. The backdrop for investors is a blend of muted expectations, operational progress, and renewed analyst optimism, setting the stage for a conversation about value. So after a year of sliding share prices, do these improvements and renewed attention mean FactSet is now attractively undervalued, or is the market already accounting for the company’s future growth?

Most Popular Narrative: 16.7% Undervalued

The most widely followed narrative currently views FactSet Research Systems as undervalued, suggesting that its current share price does not fully capture future growth and profitability expectations.

FactSet is integrating new acquisitions like Irwin and LiquidityBook, adding immediate cross-sell opportunities and expanding services across buy-side and banking workflows. This is expected to support revenue growth. The launch of new GenAI products, including Pitch Creator and conversational API, is also anticipated to provide additional services that drive adoption and increase ASV growth, positively impacting future revenue.

Curious about the math powering this bullish call? The narrative hinges on ambitious future assumptions for FactSet's earnings and margins, along with continued breakthroughs in tech adoption. Want to know what financial milestones must be hit to justify this premium? The full story reveals the surprising targets analysts are demanding for this fair value to become reality.

Result: Fair Value of $346.44 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent technology expenses and ongoing uncertainty in banking could still undermine FactSet's margin improvements and could threaten future revenue growth.

Find out about the key risks to this FactSet Research Systems narrative.

Another View: What Does Our DCF Model Say?

While analysts see FactSet as undervalued, our SWS DCF model also suggests the share price is below its fair value. Could this indicate an opportunity, or are risks holding it back for another reason?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out FactSet Research Systems for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own FactSet Research Systems Narrative

If this perspective does not align with your own, or you enjoy a hands-on approach, you can quickly craft your own narrative using our tools in just a few minutes. Do it your way

A great starting point for your FactSet Research Systems research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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