FactSet
FDS
$211.60
-0.90%
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 severe valuation derating and significant stock price decline, driven by a broader market rotation away from software and data providers amid fears of AI disruption and a challenging macroeconomic environment for financial services, as evidenced by the stock's precipitous fall from its 52-week high.…
FDS
FactSet
$211.60
Related headlines
Investment Opinion: Should I buy FDS Today?
Rating: Hold. The core thesis is that while FactSet's valuation has compressed to potentially attractive levels, significant fundamental and sentiment headwinds preclude a bullish rating until evidence of stabilization emerges.
Supporting Evidence: The stock trades at a forward P/E of 10.91x, which is deeply discounted and implies low growth expectations. However, this is juxtaposed against decelerating sequential revenue growth (0.56% in Q2) and margin compression (gross margin down 119 bps QoQ). Analyst sentiment is neutral-to-negative, with no clear bullish catalysts. The company's robust free cash flow generation ($682.9M TTM) and strong ROE (27.31%) provide a fundamental floor, but are currently overshadowed by growth concerns.
Risks & Conditions: The two biggest risks are a further slowdown in revenue growth below 5% YoY and a breakdown of the $185 technical support level. This Hold rating would upgrade to a Buy if the forward P/E compresses further toward 9x alongside evidence of margin stabilization, or if quarterly revenue growth re-accelerates above 8% YoY. It would downgrade to a Sell if revenue growth turns negative or if the stock decisively breaks below $185. Based on the current data, the stock appears fairly valued relative to its near-term challenged growth prospects, but undervalued on a long-term cash flow basis.
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FDS 12-Month Price Forecast
The AI assessment is neutral with medium confidence. FactSet presents a classic value trap scenario: attractive valuation metrics (low forward P/E, high FCF yield) are offset by clear fundamental deterioration in growth and margins. The stock is unlikely to rally meaningfully without evidence of operational stabilization, but its deep oversold condition and low beta suggest downside may be limited from here. The stance would upgrade to bullish on confirmation of two consecutive quarters of stable or improving gross margins and re-accelerating sequential revenue growth. It would turn bearish on a breakdown below the $185 support level, which would signal the value thesis has broken.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on FactSet's 12-month outlook, with a consensus price target around $275.08 and implied upside of +30.0% versus the current price.
Average Target
$275.08
6 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
6
covering this stock
Price Range
$169 - $275
Analyst target range
Analyst coverage for FactSet appears limited in the provided dataset, with only 6 analysts providing estimates for revenue and EPS, and no consensus price target or recommendation data presented in the key inputs. The institutional ratings data shows a pattern of neutral to negative sentiment, with recent actions from firms like RBC Capital ('Sector Perform'), Barclays ('Underweight'), and Wells Fargo ('Underweight') indicating a lack of bullish conviction. The wide dispersion in recent ratings—from 'Sell' (Goldman Sachs) to 'Market Perform' (BMO Capital)—and the absence of a clear 'Buy' rating signals high uncertainty and a bearish leaning among the covered analysts, which aligns with the stock's severe underperformance and the challenging narrative surrounding the financial data sector.
Bulls vs Bears: FDS Investment Factors
The evidence currently tilts bearish, as the stock's precipitous 49% decline is supported by tangible fundamental deceleration in growth and margins, coupled with overwhelmingly negative analyst sentiment. However, the bull case is grounded in a valuation that appears to have priced in this extreme pessimism, trading at a forward P/E of just 10.9x alongside sustained profitability and cash generation. The single most important tension in the investment debate is whether the current valuation compression represents a permanent derating due to AI disruption and slowed growth, or a cyclical overreaction that has created a deep value opportunity in a still-profitable franchise. The resolution hinges on whether sequential revenue and margin trends stabilize or continue to deteriorate in upcoming quarters.
Bullish
- Valuation Compressed to Historic Lows: The stock's trailing P/E of 23.71x is far below its August 2024 level of 45.50x and its forward P/E of 10.91x implies a significant earnings recovery is priced in. This places the valuation in the lower half of its recent historical range, suggesting extreme pessimism is already reflected in the price.
- Strong Profitability and Cash Flow: Despite recent margin pressure, FactSet maintains robust profitability with a Q2 net margin of 21.78% and a TTM free cash flow of $682.9 million. This supports a healthy ROE of 27.31% and provides ample internal funding for shareholder returns and operations.
- Fundamentally Stable, Recurring Revenue: The company exhibits steady, albeit modest, revenue growth with Q2 revenue of $611.0 million, up 7.07% YoY. Its business model, serving a buy-side client base that accounts for over 80% of subscription value, provides a stable and recurring revenue stream.
- Oversold Technical Condition: The stock is down 49.22% over the past year and trades near its 52-week low of $185, approximately 45% of the distance from the low to the high. This deep oversold condition, coupled with a low beta of 0.724, suggests the severe decline may have overcorrected relative to market volatility.
Bearish
- Severe Growth Deceleration and Margin Pressure: Sequential revenue growth was minimal at 0.56% in Q2, indicating a potential plateau. Concurrently, gross margin compressed from 52.62% in Q1 to 51.43% in Q2, and net income fell from $152.6 million to $133.1 million, signaling operational headwinds.
- Analyst Sentiment Overwhelmingly Negative: Institutional ratings show a pattern of neutral to negative sentiment, with recent actions including 'Underweight' (Barclays, Wells Fargo) and 'Sell' (Goldman Sachs). The absence of 'Buy' ratings reflects high uncertainty and a bearish leaning on the sector's prospects.
- AI Disruption and Sector Rotation Fears: The stock's 49% annual decline is attributed to a market rotation away from software/data providers amid fears of AI disruption, as highlighted in recent news. This narrative has led to a severe valuation derating, compressing its P/S ratio to 6.10x from much higher historical levels.
- High Client Concentration Risk: Over 80% of FactSet's annual subscription value comes from buy-side clients. This high concentration makes the company vulnerable to budget cuts within the financial services sector during economic downturns or periods of industry consolidation.
FDS Technical Analysis
The prevailing price trend for FactSet is a pronounced and sustained downtrend, with the stock down 49.22% over the past year. The current price of $211.60 sits near the lower end of its 52-week range, at approximately 45% of the distance from the 52-week low of $185.00 to the high of $474.79, indicating the stock is deeply oversold and trading at levels that may represent a value opportunity, though it remains in a clear bear market. Recent short-term momentum shows a modest 2.95% gain over the past month, which diverges positively from the longer-term downtrend, suggesting a potential stabilization or dead-cat bounce; however, this is juxtaposed against a severe 28.14% decline over the past three months, indicating the selling pressure has been intense and recent gains are fragile. Key technical support is the 52-week low of $185.00, while resistance is far above at the 52-week high of $474.79; a decisive break below $185 would signal a continuation of the downtrend, while a sustained move above the recent recovery highs near $230 would be needed to suggest a more meaningful reversal. The stock's beta of 0.724 indicates it has been about 28% less volatile than the broader market (SPY) during this turbulent period, which is notable given the magnitude of its own decline.
Beta
0.72
0.72x market volatility
Max Drawdown
-59.9%
Largest decline past year
52-Week Range
$185-$475
Price range past year
Annual Return
-49.2%
Cumulative gain past year
| Period | FDS Return | S&P 500 |
|---|---|---|
| 1m | +2.9% | +2.6% |
| 3m | -28.1% | -2.3% |
| 6m | -25.3% | +2.6% |
| 1y | -49.2% | +27.3% |
| ytd | -25.7% | -0.4% |
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FDS Fundamental Analysis
FactSet's revenue trajectory shows steady but modest growth, with Q2 FY2026 revenue of $611.0 million representing a 7.07% year-over-year increase; however, sequential growth from the prior quarter's $607.6 million was minimal at 0.56%, indicating a potential plateau in the near-term growth rate. The company remains solidly profitable, with Q2 net income of $133.1 million and a net margin of 21.78%, though profitability has softened from the prior quarter where net income was $152.6 million with a margin of 25.11%; gross margin for Q2 was 51.43%, down from 52.62% in Q1, reflecting some margin compression. The balance sheet and cash flow position remain healthy, with a debt-to-equity ratio of 0.71 indicating moderate leverage, a current ratio of 1.40 demonstrating sufficient short-term liquidity, and robust annual free cash flow generation of $682.9 million (TTM) providing ample internal funding for dividends and share repurchases, as evidenced by the strong return on equity of 27.31%.
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 FactSet's consistent profitability, the primary valuation metric selected is the Price-to-Earnings (PE) ratio. The stock currently trades at a trailing PE of 23.71x and a forward PE of 10.91x based on estimated EPS; the significant discount of the forward multiple implies the market expects a substantial earnings recovery or is pricing in deeply depressed near-term earnings. Compared to sector averages, FactSet's trailing PE of 23.71x is difficult to contextualize without a specific industry average, but its Price-to-Sales ratio of 6.10x and EV/EBITDA of 15.92x suggest a valuation that has compressed significantly from historical highs. Historically, the stock's own trailing PE has ranged widely; the current 23.71x is below the 29.29x seen in May 2025 and far below the 45.50x in August 2024, placing it in the lower half of its recent historical range, which suggests the market has already priced in considerable pessimism regarding future growth and margins.
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 faces clear margin pressure, with Q2 gross margin declining 119 basis points sequentially to 51.43% and net income dropping 12.8% quarter-over-quarter. While the debt-to-equity ratio of 0.71 is moderate, the company's high dependence on financial sector clients (over 80% of subscription value) creates revenue concentration risk. Should the challenging macro environment for financial services persist, client budget constraints could further pressure the already decelerating 7% YoY revenue growth, potentially straining the valuation which still carries a P/S of 6.1x.
Market & Competitive Risks: The primary market risk is valuation compression, as the stock has already derated from a trailing P/E of 45.50x in August 2024 to 23.71x today. The broader 'AI-phobia' hammering the software and data sector, as noted in recent news, poses a persistent threat of multiple contraction regardless of company-specific performance. FactSet's beta of 0.724 indicates it has been less volatile than the market, but its severe underperformance (-78.7% relative strength vs. SPY over 1 year) shows it is suffering from intense sector-specific selling pressure and negative sentiment.
Worst-Case Scenario: The worst-case scenario involves a continuation of the current narrative: AI-driven competitive disruption accelerates, leading to client attrition, while a recession triggers deep budget cuts across the buy-side. This could cause revenue growth to turn negative and margins to compress further. In this adverse scenario, the stock could re-test and break its 52-week low of $185, representing a potential downside of -12.6% from the current price of $211.60. A re-rating to a forward P/E of 8x on lowered earnings could push the stock toward the $170-$180 range, implying a -15% to -20% decline.
FAQ
The key risks are, in order of severity: 1) Competitive/AI Disruption Risk: The overarching market narrative fears AI will disrupt traditional data aggregators, potentially compressing valuations permanently. 2) Growth Deceleration Risk: Sequential revenue growth has stalled at 0.56%, and a further slowdown could break the investment thesis. 3) Margin Compression Risk: Q2 gross margin fell 119 bps sequentially to 51.43%; sustained pressure would hurt profitability. 4) Client Concentration Risk: Over 80% of subscription value relies on buy-side financial clients, making revenue vulnerable to sector downturns.
The 12-month forecast presents three scenarios. The Base Case (60% probability) sees the stock trading between $230 and $260 as growth stabilizes modestly at ~7% YoY. The Bull Case (25% probability) projects a rally to $320-$350 on successful execution and a sector sentiment rebound. The Bear Case (15% probability) warns of a re-test of the $185-$200 range if operational metrics worsen. The most likely outcome is the Base Case of sideways trading, as the stock digests its massive decline and awaits clearer fundamental direction. The key assumption is that the severe valuation deration has mostly run its course.
FDS appears undervalued based on traditional earnings metrics but fairly valued given its growth challenges. Its forward P/E of 10.91x is deeply discounted compared to its own historical average and suggests the market expects minimal growth or further earnings pressure. The Price-to-Sales ratio of 6.10x and EV/EBITDA of 15.92x have compressed significantly from prior highs. The valuation implies the market believes FactSet's best growth days are behind it and that it faces sustained competitive and margin headwinds. For a company still generating a 27% ROE, this may be too pessimistic, creating a potential value opportunity.
FDS is a speculative buy only for patient, value-oriented investors comfortable with significant uncertainty. The forward P/E of 10.91x offers a large margin of safety if the company can stabilize its business, implying substantial upside if sentiment improves. However, with revenue growth decelerating, margins under pressure, and analyst sentiment neutral-to-negative, it is not a good buy for growth investors or those with a short time horizon. The biggest downside risk is a continuation of the sector-wide derating, potentially driving the stock back to its 52-week low of $185.
FDS is unsuitable for short-term trading due to its low beta (0.724) and lack of near-term positive catalysts. It is best considered a long-term, contrarian value investment with a minimum holding period of 2-3 years. This timeframe allows for the potential resolution of the AI disruption narrative, a possible turnaround in operational execution, and a mean reversion in valuation. The stock's high free cash flow generation and profitability support a long-term hold, but investors must be prepared for continued volatility and uncertainty in the near term.