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Investing.com - Goldman Sachs has lowered its price target on FactSet Research Systems (NYSE:FDS) to $282.00 from $412.00 while maintaining a Sell rating following the company’s fourth-quarter results. The stock, currently trading near its 52-week low of $297.86, has declined about 37% year-to-date. According to InvestingPro data, technical indicators suggest the stock is in oversold territory.
The financial data provider reported weaker-than-expected organic revenue growth, operating margins, and earnings per share in its fiscal fourth quarter. Despite maintaining a healthy gross profit margin of 52.7% and generating $576.5 million in levered free cash flow over the last twelve months, FactSet’s newly introduced guidance for fiscal 2026 fell below market expectations for both top-line and bottom-line performance. For deeper insights into FactSet’s financial health and valuation metrics, InvestingPro subscribers have access to over 12 additional exclusive tips and comprehensive analysis.
Goldman Sachs noted that FactSet is experiencing longer sales cycles and more rigorous client approval processes. Management expects revenue growth to decelerate from 5.4% in fiscal 2025 to 4.9% in fiscal 2026, while organic ASV (Annual Subscription Value) growth is projected to slow from 5.7% to 5.2% during the same period.
The company is guiding for operating margin contraction from 36.3% in fiscal 2025 to 34.8% in fiscal 2026, attributed to rising technology and content costs, along with increasing investments.
Goldman Sachs expressed concern that competition from generative AI native companies could potentially erode FactSet’s pricing power and market share, while AI efficiencies on the buy-side could lower headcount and volume demand for the company’s services.
In other recent news, FactSet Research Systems reported higher revenues and operating expenses, resulting in an adjusted operating margin of 33.8%, slightly below UBS’s estimate of 34.2%. The company’s organic Annual Subscription Value (ASV) growth reached 5.7%, surpassing both UBS’s and the Street’s expectations. Despite these positive financial results, several firms have adjusted their price targets for FactSet. Stifel lowered its price target to $372, citing concerns about the company’s ongoing investment phase, while maintaining a Hold rating. BMO Capital also reduced its price target to $324, attributing the decision to higher technology expenses and increased bonus payments, although they noted improvements in ASV growth. Wells Fargo cut its price target to $296 due to competition from AI and FactSet’s forward guidance falling below Street estimates. Jefferies adjusted its price target to $315 following FactSet’s fiscal 2026 guidance, which included ASV growth projections aligning with market expectations. UBS, on the other hand, maintained a Neutral rating with a $480 price target despite the strong ASV growth.
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