BMO cuts FactSet stock target to $466, maintains rating

On Friday, BMO Capital Markets adjusted its outlook on FactSet Research Systems (NYSE:FDS), reducing the price target to $466 from $498, while keeping a Market Perform rating on the company’s shares. The adjustment follows FactSet’s recent earnings report, where the company posted an adjusted earnings per share (EPS) that exceeded expectations, driven by strong profit margins of 54.15%. This occurred even as the company experienced a slowdown in Annual Subscription Value (ASV) growth. According to InvestingPro data, 11 analysts have recently revised their earnings expectations downward for the upcoming period, while the stock trades at a P/E ratio of 31.14.

The analysts at BMO noted FactSet’s management expressed increased confidence for the second half of fiscal 2025, despite ongoing concerns about the broader economic environment. This optimism is supported by a robust pipeline and a successful renewal cycle, particularly within the banking sector, which is anticipated to contribute to performance improvements in the latter part of the year. The company’s financial health remains strong, with InvestingPro analysis showing a GOOD overall financial health score and impressive dividend consistency, having maintained payments for 27 consecutive years.

FactSet’s financial guidance for fiscal year 2025 was essentially reaffirmed, with slight adjustments to account for some recent smaller-scale acquisitions, commonly referred to as tuck-in acquisitions. These strategic moves are part of the company’s efforts to enhance its product offerings and market position.

In light of the current macroeconomic conditions, BMO has revised its estimates for FactSet, adopting a more cautious stance on the stock. The reduction in the price target reflects this revised perspective, taking into consideration the potential impacts of the economic environment on FactSet’s business operations and growth trajectory.

FactSet Research Systems, known for providing financial information and analytic software for investment professionals, continues to navigate the challenges posed by the economic landscape while capitalizing on its strengths in the market. With a market capitalization of $16.39 billion and revenue growth of 4.66% over the last twelve months, the company maintains a solid market position. The company’s stock price will continue to be influenced by its financial performance, market conditions, and the execution of its strategic initiatives. For deeper insights into FactSet’s valuation and growth prospects, investors can access comprehensive analysis and additional ProTips through InvestingPro’s detailed research reports.

In other recent news, FactSet Research Systems reported its second-quarter earnings for fiscal year 2025, surpassing expectations with an adjusted diluted earnings per share (EPS) of $4.28, slightly above the forecasted $4.21. The company also reported revenues of $571 million, which exceeded the anticipated $570.13 million, marking a 4.5% increase year-over-year. Despite these positive results, Raymond (NSE:RYMD) James maintained an Underperform rating on FactSet, citing concerns over the company’s shift from consistent growth to being more cyclically affected, and the challenges posed by strong competition. Raymond James analysts also expressed skepticism about the company’s recent acquisitions of Irwin and LiquidityBook, suggesting that FactSet might have overpaid as part of its growth strategy. FactSet reaffirmed its guidance for organic Annual Subscription Value (ASV) growth, expecting acceleration in the second half of the fiscal year. The company highlighted its strategic initiatives, including the launch of new products and expansion in private company data coverage, as key drivers for future growth. FactSet’s management remains confident in its strategic direction, emphasizing its preparedness for growth in the latter half of the fiscal year.

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