FactSet
FDS
$270.85
+10.34%
FactSet Research Systems provides financial data, analytics, and workflow solutions to the global investment community, aggregating content from third-party suppliers, news sources, and exchanges into its integrated workstations. The company is a well-established, mid-tier player in the financial data and analytics industry, serving a predominantly buy-side client base that accounts for over 80% of its subscription value. The current investor narrative is dominated by a significant valuation derating and concerns over competitive pressures, particularly from larger rivals and the potential for AI-driven disruption in the financial data sector, as evidenced by the stock's severe underperformance and recent analyst downgrades to Underweight and Sell ratings.…
FDS
FactSet
$270.85
Related headlines
Investment Opinion: Should I buy FDS Today?
Rating: Hold. The core thesis is that FactSet is a fundamentally sound company caught in a severe sector de-rating, making it too early to buy the dip but also too late to sell after a 47% decline, warranting a neutral stance pending clearer signs of stabilization.
Supporting Evidence: The stock trades at a forward P/E of 12.66x, a significant discount to its historical average and implying subdued growth expectations. Revenue continues to grow at 7.07% YoY, and profitability remains robust with a net margin of 25.7%. However, analyst sentiment is bearish with recent Sell/Underweight ratings, and the technical picture remains weak with the stock down 11.47% over six months despite a recent 13.22% three-month bounce. The valuation is neither deeply undervalued nor egregiously expensive relative to its own cash flow, trading at a P/CF of 19.5x.
Risks & Conditions: The two biggest risks are accelerated competitive displacement and a failure to articulate a credible AI strategy. This Hold rating would upgrade to a Buy if the forward P/E compresses further to near 10x (approximately $195) or if the company demonstrates re-accelerating organic growth above 8% with stable margins. It would downgrade to a Sell on a breakdown below the $185 support on worsening fundamentals. Relative to its history, the stock is fairly valued to slightly undervalued, but relative to the sector's fears, it may not yet have found a bottom.
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FDS 12-Month Price Forecast
The AI assessment is neutral with medium confidence. FactSet's fundamentals are intact but facing clear headwinds. The valuation appears reasonable, but not compelling enough to offset the powerful negative momentum and sector narrative. The stock likely requires a catalyst—either significantly cheaper valuation or proof of durable competitive moats—to warrant a bullish stance. The stance would upgrade to bullish on a combination of valuation below $200 (forward P/E ~10x) and evidence of successful product innovation. It would turn bearish on a breakdown of the $185 support level coupled with a guidance cut.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on FactSet's 12-month outlook, with a consensus price target around $352.11 and implied upside of +30.0% versus the current price.
Average Target
$352.11
6 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
6
covering this stock
Price Range
$217 - $352
Analyst target range
Analyst coverage is limited with only 6 analysts providing estimates, and the institutional ratings show a bearish tilt with recent actions including Underweight (Barclays, Wells Fargo) and Sell (Goldman Sachs) ratings, indicating weak near-term sentiment. The average revenue estimate for the period is $3.05 billion, with a tight range between $3.03 billion and $3.08 billion, suggesting analysts have high conviction on the top-line but the wide dispersion in stock ratings reflects deep uncertainty over margins, competitive position, and valuation in the face of industry headwinds. The lack of a published consensus price target in the data, coupled with the low analyst count and predominantly negative ratings, implies limited institutional sponsorship and high uncertainty, which can lead to elevated volatility and inefficient price discovery for this mid-cap name.
Bulls vs Bears: FDS Investment Factors
The evidence currently tilts bearish, driven by severe price action, negative analyst sentiment, and structural fears about competition and AI disruption. The bull case rests on a deep valuation discount and strong underlying cash flows, suggesting the market may have over-penalized a still-profitable business. The single most important tension in the investment debate is whether FactSet's 7% revenue growth and robust cash generation can justify its current valuation, or if the threat of AI and competitive encroachment will lead to permanent multiple compression and market share loss. The resolution of this tension—specifically, the company's ability to demonstrate durable competitive advantages in its next earnings reports—will dictate the stock's direction.
Bullish
- Deep Valuation Discount to History: The stock's trailing P/E of 23.71x is near the lower end of its historical range, which has frequently been above 30x. This represents a significant derating, offering a potential entry point if the company's fundamentals stabilize.
- Strong Free Cash Flow Generation: The company generates robust free cash flow, with $682.87 million on a TTM basis. This provides financial flexibility to fund dividends, share repurchases, and strategic investments without excessive leverage, as evidenced by a manageable D/E ratio of 0.71.
- Healthy Profitability Metrics: FactSet maintains solid profitability with a net margin of 25.7% and a return on equity of 27.3%. These metrics indicate efficient use of capital and a durable business model despite top-line deceleration.
- Low Market Volatility (Beta 0.69): The stock's beta of 0.69 indicates it has been 31% less volatile than the broader market during its decline. This suggests defensive characteristics and a lower correlation to market swings, which could appeal to risk-averse investors.
Bearish
- Severe Technical Downtrend & Underperformance: The stock is down 47.28% over the past year and trades near 53% of its 52-week range, closer to its low of $185. This severe underperformance, with a -75.5% relative strength vs. the S&P 500, reflects deep-seated fundamental concerns.
- Analyst Sentiment is Overwhelmingly Negative: Recent analyst actions include Underweight (Barclays, Wells Fargo) and Sell (Goldman Sachs) ratings. This bearish institutional sentiment, coupled with only 6 covering analysts, indicates weak sponsorship and high uncertainty.
- Operating Margin Compression: Operating margins have compressed sequentially from 31.61% in Q1 to 30.27% in Q2. This suggests rising cost pressures or investment needs that could threaten profitability if revenue growth continues to slow.
- High Short Interest (Short Ratio 6.79): A short ratio of 6.79 indicates significant bearish speculative positioning. This creates a potential overhang and risk of short squeezes, but more importantly, reflects a market consensus betting on further downside.
FDS Technical Analysis
The stock is in a pronounced and sustained downtrend, evidenced by a 1-year price change of -47.28% and trading at approximately 53% of its 52-week range, positioned closer to its 52-week low of $185 than its high of $464.56, suggesting a deep value opportunity but also significant fundamental concerns that have driven the decline. Recent momentum shows a modest short-term recovery, with a 1-month gain of 5.66% and a 3-month gain of 13.22%, which diverges positively from the longer-term downtrend and could signal a potential stabilization or bear market rally, though the 6-month change remains negative at -11.47%. Key technical levels are clearly defined by the 52-week high of $464.56 as major resistance and the 52-week low of $185 as critical support; a sustained break below support would signal a continuation of the downtrend, while reclaiming higher levels is necessary to suggest a reversal, and the stock's beta of 0.69 indicates it has been 31% less volatile than the broader market during this turbulent period, which is atypical for a growth-oriented name and may reflect its defensive cash flows.
Beta
0.69
0.69x market volatility
Max Drawdown
-59.9%
Largest decline past year
52-Week Range
$185-$457
Price range past year
Annual Return
-40.9%
Cumulative gain past year
| Period | FDS Return | S&P 500 |
|---|---|---|
| 1m | +19.0% | +5.3% |
| 3m | +21.5% | +11.5% |
| 6m | -3.0% | +10.9% |
| 1y | -40.9% | +28.7% |
| ytd | -4.9% | +11.2% |
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FDS Fundamental Analysis
Revenue growth remains positive but has decelerated, with the most recent quarterly revenue of $611.02 million representing a 7.07% year-over-year increase; however, this growth rate has moderated from the high-single-digit pace seen in prior quarters, indicating a maturing top-line trajectory largely driven by its core Americas segment, which contributed $396.18 million. Profitability is robust with a net income of $133.06 million and a gross margin of 51.43% for the quarter, though operating margins have shown some compression sequentially from 31.61% in Q1 to 30.27% in Q2, reflecting potential cost pressures or investment spend. The balance sheet and cash flow position is healthy, characterized by a manageable debt-to-equity ratio of 0.71, strong free cash flow generation of $682.87 million on a trailing twelve-month basis, and a solid return on equity of 27.31%, indicating the company generates ample cash to fund operations, dividends, and share repurchases without excessive financial risk.
Quarterly Revenue
$611019000.0B
2026-02
Revenue YoY Growth
+0.07%
YoY Comparison
Gross Margin
+0.51%
Latest Quarter
Free Cash Flow
$682865000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is FDS Overvalued?
Given a positive net income, the primary valuation metric is the P/E ratio. The trailing P/E stands at 23.71x, while the forward P/E is significantly lower at 12.66x, indicating the market expects a substantial recovery in earnings or has heavily discounted near-term prospects. Compared to its own historical range, the current trailing P/E of 23.71x is near the lower end of its multi-year spectrum, which has seen ratios frequently above 30x, suggesting the stock is trading at a discount to its historical valuation, potentially due to growth concerns or sector de-rating. The stock trades at a premium to some absolute multiples like its Price/Sales ratio of 6.10x, but the sharp contraction in the forward P/E implies the market is pricing in a more subdued growth profile or demanding a higher risk premium given the sector's challenges.
PE
23.7x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 15x~64x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
15.9x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: FactSet's primary financial risk is not leverage or cash burn, but rather margin pressure and growth deceleration. Operating margins compressed 134 basis points sequentially in the last quarter, and revenue growth of 7.07% YoY represents a maturing top-line. The company's heavy reliance on the buy-side (over 80% of subscription value) creates client concentration risk, where a downturn in asset management could directly pressure revenues. However, strong free cash flow generation of $683M TTM and a healthy current ratio of 1.4 provide a solid buffer against near-term operational stress.
Market & Competitive Risks: The paramount risk is sector-wide de-rating due to AI disruption fears and competitive pressure from larger players like Bloomberg and Refinitiv. This is evidenced by the stock's 47% annual decline and its high Price/Sales ratio of 6.10x, which remains a premium multiple demanding sustained growth. The stock's low beta of 0.69 is atypical for a growth name and may reflect the market's reassessment of its growth profile towards a more defensive, slower-growth utility. Recent news highlighting 'AI-phobia' crushing software sector valuations confirms this as a persistent market headwind.
Worst-Case Scenario: The worst-case scenario involves a continuation of market share loss to AI-native platforms and larger competitors, leading to a growth stall (0-2% revenue growth) and further margin compression. This could trigger a re-rating towards a pure utility multiple. In this adverse scenario, the stock could realistically retest its 52-week low of $185, representing a downside of approximately -25% from the current price of ~$245. A breach of this level could see a fall towards the $160-$170 range, aligning with a forward P/E of 8-9x, which would imply a total loss potential of -30% to -35% for investors buying at current levels.
FAQ
The key risks are, in order of severity: 1) Competitive & Technological Disruption: The threat from larger rivals and AI-driven platforms could permanently impair growth and margins, as highlighted by recent 'AI-phobia' sector news. 2) Growth Deceleration: Revenue growth has slowed to 7.07% YoY; further slowdown could trigger another de-rating. 3) Negative Sentiment & Technical Damage: With a 47% annual decline, bearish analyst ratings (Sell/Underweight), and a high short ratio of 6.79, the stock suffers from a severe lack of positive momentum. 4) Margin Pressure: Sequential operating margin compression from 31.61% to 30.27% indicates cost headwinds that could erode profitability.
The 12-month forecast presents three scenarios. The Base Case (55% probability) sees the stock trading between $240 and $280, as it muddles through with ~7% growth and stable margins. The Bull Case (25% probability) targets $320-$380 on a multiple re-rating if AI fears subside and growth stabilizes. The Bear Case (20% probability) risks a retest of the $185 low if competition intensifies and growth stalls. The most likely scenario is the Base Case, which assumes the current challenging environment persists without significant improvement or further deterioration. The key assumption is that FactSet's core business remains sticky enough to prevent rapid market share loss.
FDS is fairly valued to slightly undervalued relative to its own historical trading range, but the market is clearly assigning a higher risk premium. The trailing P/E of 23.71x is at the low end of its historical spectrum, and the forward P/E of 12.66x implies the market expects minimal growth. Compared to absolute metrics, a Price/Sales of 6.10x is not cheap. The valuation implies the market expects mid-single-digit revenue growth with flat-to-declining margins, pricing in competitive and technological threats. It is not screamingly undervalued, but the derating appears severe relative to the company's persistent profitability and cash generation.
FDS is a complex buy at current levels. For value investors seeking a financially strong company trading at a discount to its history (forward P/E of 12.66x vs. historical multiples often above 30x), it presents a potential opportunity. However, the significant bearish analyst sentiment, high short interest, and existential fears about AI disruption create substantial risk. It is not a good buy for growth investors or those with low risk tolerance. A more conservative approach would be to wait for a confirmed breakout above key resistance or a deeper valuation cushion near its 52-week low of $185.
FDS is unsuitable for short-term trading due to its low beta (0.69) and lack of positive near-term catalysts; it is mired in a downtrend. It is more appropriate for long-term, patient investors (3-5 year horizon) who believe the company can navigate industry disruption and that the current valuation discount is excessive. The stock's defensive cash flows and dividend (1.13% yield) support a long-term hold, but investors must be prepared for continued volatility and uncertainty as the competitive landscape evolves. A minimum holding period of 18-24 months is suggested to allow time for the investment thesis—either recovery or further decline—to play out.