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Investing.com - Raymond James reiterated a Market Perform rating on FactSet Research Systems (NYSE:FDS) and identified the company as a potential acquisition target with a takeout price of $458.00. According to InvestingPro data, FactSet’s stock is currently trading at $384.92, near its 52-week low of $365.75, with the company showing signs of being undervalued based on InvestingPro’s Fair Value analysis.
The research firm noted that FactSet’s recent sharp multiple de-rating has increased the likelihood of an acquisition, with private equity firms being the most logical buyers. FactSet’s valuation has fallen to levels not seen in more than five years, currently trading at 16x NTM EV/EBITDA and 21x NTM EPS.
Raymond James attributed the valuation decline to mediocre sales momentum, price competition, an unexpected CEO transition, and concerns about competitive pressure from AI. Despite these issues, the firm highlighted FactSet’s attractive characteristics for potential buyers, including its recurring revenue business model, strong long-term track record, and modest financial leverage at 1.2x net debt to TTM EBITDA. InvestingPro analysis reveals the company maintains a robust financial health score of GOOD, with strong profitability metrics including a 53.3% gross margin and consistent dividend payments for 27 consecutive years.
While the firm doesn’t see obvious strategic buyers for FactSet, it believes the company’s limited balance sheet leverage would appeal particularly to private equity investors. Raymond James conducted a basic LBO analysis to assess the viability of a private equity acquisition.
The analysis showed that assuming a 20% premium to FactSet’s previous Friday closing price, 7x leverage, and a 17x EV/EBITDA exit multiple, a private equity buyer could achieve a 13% internal rate of return, which Raymond James considers acceptable. For deeper insights into FactSet’s valuation and financial metrics, including 8 additional ProTips and comprehensive analysis, check out the full company report on InvestingPro, where you’ll find detailed research covering over 1,400 US stocks.
In other recent news, FactSet Research Systems reported its third-quarter earnings for fiscal year 2025, showcasing a mixed financial performance. The company posted an earnings per share of $4.27, which was slightly below the forecast of $4.30, resulting in a 0.7% miss. However, FactSet’s revenue exceeded expectations, reaching $586 million compared to the projected $580.54 million, delivering a 0.85% surprise. Additionally, Raymond James upgraded FactSet’s stock rating from underperform to market perform. This upgrade was influenced by the company’s valuation multiple nearing its five-year low, suggesting limited downside risk. Raymond James also noted improvements in FactSet’s Annual Subscription Value and revenue growth in the fiscal third quarter of 2025. The investment firm highlighted enhancements in the company’s sales pipeline as contributing to a more balanced outlook. These developments reflect a positive shift in the company’s recent performance metrics.
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