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On Friday, RBC Capital maintained its Sector Perform rating on shares of FactSet Research Systems (NYSE:FDS) with a steady price target of $503.00. The firm highlighted that the Annual Subscription Value (ASV) growth for FactSet saw moderation in the first quarter of 2025 due to seasonal factors.
With the stock trading near its 52-week high of $499.87 and commanding a P/E ratio of 33.9, stagnant pricing could potentially impact ASV growth in the second quarter of 2025.
Despite the concerns for the upcoming quarter, the analyst from RBC Capital noted the possibility of an uptick due to the anticipated closure of a substantial Wealth management deal and more favorable comparisons to the previous year, when FactSet experienced a Wealth segment cancellation in the second quarter of 2024.
The second half of 2025 could witness improved ASV growth, bolstered by easier year-over-year comparisons, competitive wins, the opening of asset management budgets, and a recovery in the capital markets that may stimulate investment banking hiring. According to InvestingPro data, FactSet maintains strong financial health with revenue growth of 5.64% over the last twelve months.
Moreover, FactSet's margins significantly exceeded estimates recently, with a robust gross profit margin of 54.07%. However, the company forecasts that margins for the first half of 2025 will align with the midpoint of its guidance. This projection suggests that there may be considerable margin pressure in the second quarter of 2025, although RBC Capital suggests that FactSet's outlook might be on the conservative side.
Notably, FactSet has maintained dividend payments for 26 consecutive years, demonstrating consistent financial stability. For more detailed insights and additional ProTips, visit InvestingPro.
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