UBS maintains FactSet Research Systems stock rating at Neutral despite strong ASV growth

Investing.com - UBS has reiterated its Neutral rating and $480.00 price target on FactSet Research Systems (NYSE:FDS) following the company’s latest financial results. According to InvestingPro data, the stock has declined significantly, falling nearly 17% in the past week and trading near its 52-week low of $297.86. Based on InvestingPro’s Fair Value analysis, the stock appears undervalued at current levels.

FactSet reported higher revenues and higher operating expenses than UBS had forecast, resulting in a lower adjusted operating margin of 33.8% compared to UBS’s estimate of 34.2%. The company’s organic Annual Subscription Value (ASV) growth reached 5.7%, up from 4.5% in the previous quarter and exceeding both UBS’s estimate of 4.6% and the Street consensus of 4.9%. InvestingPro analysis shows the company maintains strong profitability with a 52.7% gross margin and healthy returns, earning a FAIR financial health rating.

The company added $81.8 million in organic ASV in the fiscal fourth quarter, representing a 53% year-over-year increase. This strong performance in ASV growth was a highlight of the report.

FactSet provided its initial fiscal year 2026 outlook, projecting organic ASV growth of 4.2-6.2% and an adjusted operating margin of 34.0-35.5%, which is lower than the fiscal year 2025 margin of 36.3%. The company’s earnings per share guidance range of $16.90-17.60 represents a year-over-year growth range of -0.5% to +4%.

The midpoint of FactSet’s EPS guidance at $17.25 falls almost 6% below both the Street consensus and UBS estimates of approximately $18.26 and $18.29, respectively. UBS noted that while the headline guidance appears soft, this weakness may already be priced into the stock, suggesting the solid ASV results and outlook could support the shares.

In other recent news, FactSet Research Systems has experienced a series of price target reductions from various financial firms following its latest earnings report and fiscal guidance. BMO Capital lowered its price target to $324, citing a margin-driven miss in the company’s earnings due to increased technology expenses and bonus payments. Despite these challenges, BMO highlighted an improvement in the company’s Annual Subscription Value (ASV) growth driven by the Buy-Side. Similarly, Wells Fargo reduced its price target to $296, noting that while FactSet’s organic ASV exceeded expectations, its forward guidance fell short of market estimates.

Jefferies also adjusted its price target to $315, aligning with FactSet’s fiscal 2026 ASV growth projections, which met market expectations. Evercore ISI cut its target to $328, attributing the decision to margin concerns related to investments in FactSet’s platform, with a significant portion aimed at growth initiatives. Stifel lowered its price target to $372, maintaining a Hold rating amidst concerns about the company’s investment phase. These developments reflect the broader sentiment among analysts regarding FactSet’s financial outlook and strategic investments.

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