FactSet
FDS
$232.00
+3.11%
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 reset and concerns over sector-wide pressures, as evidenced by the stock's sharp decline and recent analyst downgrades, reflecting market fears about the impact of AI disruption, high interest rates, and competitive threats on traditional data providers.…
FDS
FactSet
$232.00
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Investment Opinion: Should I buy FDS Today?
Rating & Thesis: FactSet is a Hold. The stock presents a classic value trap scenario—it is cheap on a forward P/E basis but faces significant fundamental headwinds that justify the discount, with no near-term catalyst for a re-rating evident in analyst sentiment or recent news.
Supporting Evidence: The forward P/E of 11.9x is compelling, and the company's financial health is strong, evidenced by $683M in annual FCF, a 27.3% ROE, and a manageable D/E ratio of 0.71. However, these positives are counterbalanced by decelerating revenue growth (7.1% YoY), quarter-over-quarter margin compression, and overwhelmingly neutral-to-negative analyst ratings with no bullish coverage.
Risks & Conditions: The two biggest risks are a further slowdown in revenue growth below 7% and a failure to stabilize margins. This Hold would upgrade to a Buy if revenue growth re-accelerates above 9% while margins stabilize, or if the forward P/E compresses further toward 10x without a deterioration in fundamentals. It would downgrade to a Sell if revenue growth falls below 5% or if the stock breaks decisively below the $185 support level. Relative to its own history and the current risk profile, the stock appears fairly valued, pricing in the existing challenges but offering little margin of safety for new adverse developments.
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FDS 12-Month Price Forecast
The AI assessment is neutral with medium confidence. FactSet is a financially strong company caught in a severe sector-wide derating. The low forward multiple and high cash flow are compelling, but they are rightly discounted for slowing growth and existential competitive fears. The most likely path is sideways consolidation (base case, 60% probability) as the company proves its durability but fails to reignite growth engines. The stance would turn bullish on evidence of growth stabilization above 7.5% and would turn bearish on a breakdown below $185 support.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on FactSet's 12-month outlook, with a consensus price target around $301.60 and implied upside of +30.0% versus the current price.
Average Target
$301.60
6 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
6
covering this stock
Price Range
$186 - $302
Analyst target range
Analyst coverage for FactSet appears limited, with only 6 analysts providing estimates for future EPS and revenue, and the provided institutional ratings data shows a series of 'Hold', 'Sector Perform', and 'Underweight' ratings from major firms like RBC Capital, Barclays, and Wells Fargo throughout late 2025 and early 2026. The consensus sentiment is neutral to bearish, with no recent 'Buy' ratings visible in the data, and actions like Goldman Sachs maintaining a 'Sell' rating in December 2025; this lack of bullish coverage and the pattern of neutral/negative ratings reflects significant skepticism about near-term catalysts or a fundamental turnaround. The wide dispersion in analyst views and the limited number of covering analysts typically leads to higher volatility and less efficient price discovery, as the stock's narrative is less defined by institutional research, leaving it more susceptible to macro sentiment and sector-wide fears like the 'AI-phobia' mentioned in recent news.
Bulls vs Bears: FDS Investment Factors
The evidence currently tilts bearish, as the fundamental deceleration in growth and margins, coupled with overwhelming negative sector sentiment and analyst skepticism, outweighs the attractive valuation and strong cash flow. The single most important tension in the investment debate is whether FactSet's 7% revenue growth and robust cash generation can justify its current forward P/E of 11.9x in the face of perceived existential threats from AI and a high-interest-rate environment. The resolution hinges on the company demonstrating an effective competitive moat and a path to re-accelerating growth, which the market currently doubts.
Bullish
- Strong Free Cash Flow Generation: FactSet generated $682.87 million in trailing twelve-month free cash flow, demonstrating robust financial health and the ability to self-fund operations, dividends, and buybacks. This substantial cash generation provides a margin of safety and supports shareholder returns even in a downturn.
- Attractive Forward Valuation: The stock trades at a forward P/E of just 11.9x, a significant discount to its trailing P/E of 23.7x, implying the market has priced in severe pessimism. This forward multiple suggests the stock is cheap if the company can meet or exceed its earnings estimates.
- Solid Balance Sheet & Profitability: With a debt-to-equity ratio of 0.71, a current ratio of 1.40, and a high return on equity of 27.3%, FactSet maintains a strong financial foundation. Despite recent margin compression, the company remains consistently profitable with a net margin of 21.8% in Q2.
- Deeply Oversold Technical Position: Trading at $232, the stock is just 49.4% of its 52-week range, having fallen 50% over the past year to a low of $185. This extreme oversold condition, coupled with a low beta of 0.69, suggests the sell-off may be overdone relative to the company's fundamentals.
Bearish
- Severe Growth Deceleration & Margin Pressure: Q2 revenue growth slowed to 7.1% YoY from 8.3% in Q1, while the net margin compressed to 21.8% from 25.1%. This dual pressure on the top and bottom lines validates market fears about the company's growth trajectory and operational efficiency.
- Sector-Wide 'AI-Phobia' & Competitive Disruption: Recent news highlights 'AI-phobia' hammering software and financial data sectors, crushing valuations as investors fear disruption. With over 80% of subscription value from buy-side clients, FactSet is highly exposed to potential AI-driven workflow changes and competitive threats.
- Negative Analyst Sentiment & Lack of Catalysts: Analyst ratings are dominated by 'Hold', 'Sector Perform', and 'Sell' with no recent 'Buy' ratings, reflecting deep skepticism. The limited coverage (6 analysts) and lack of bullish catalysts suggest institutional confidence is low, hindering a re-rating.
- Valuation Reset Amid High Macro Uncertainty: Fed warnings on persistent inflation threaten a delayed rate-cut cycle, which typically compresses valuations for stocks like FDS. The stock's PEG ratio of 2.05 indicates investors are paying a premium for expected growth that is now in question.
FDS Technical Analysis
The prevailing price trend is a severe and sustained downtrend, with the stock down 50.0% over the past year, culminating in a 52-week low of $185.00. With a current price of $232.00, the stock is trading at just 49.4% of its 52-week range (high of $469.44), indicating it is deeply oversold and positioned near multi-year lows, which may present a value opportunity but also signals significant underlying fundamental or sectoral distress. Recent momentum shows a complex picture of attempted recovery within a broader bear market, with a strong 18.9% gain over the last three months sharply contrasting with a 4.4% decline over the past month; this divergence suggests the recent rally from the lows may be losing steam, potentially signaling a failed recovery or consolidation before a retest of support. Key technical levels are clearly defined, with major resistance at the 52-week high of $469.44 and immediate support at the recent low of $185.00; a sustained break below $185 would signal a continuation of the downtrend, while a move above the recent recovery highs near $240-$250 is needed to suggest a more durable bottom. The stock's beta of 0.69 indicates it has been 31% less volatile than the broader market (SPY) over the past year, which is unusual given its dramatic price drop and suggests the sell-off has been driven by company or sector-specific issues rather than broad market moves.
Beta
0.69
0.69x market volatility
Max Drawdown
-59.9%
Largest decline past year
52-Week Range
$185-$469
Price range past year
Annual Return
-50.0%
Cumulative gain past year
| Period | FDS Return | S&P 500 |
|---|---|---|
| 1m | -4.4% | +4.4% |
| 3m | +18.9% | +9.3% |
| 6m | -16.3% | +10.5% |
| 1y | -50.0% | +28.8% |
| ytd | -18.6% | +9.3% |
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FDS Fundamental Analysis
Revenue growth remains positive but has decelerated, with Q2 FY2026 revenue of $611.02 million representing a 7.1% year-over-year increase; however, this marks a slowdown from the 8.3% growth seen in the prior quarter (Q1 FY2026 revenue of $607.62 million), indicating a potential moderation in the top-line expansion trajectory. The company is consistently profitable with robust margins, reporting Q2 net income of $133.06 million and a gross margin of 51.4%; while the net margin of 21.8% is healthy, it has compressed from 25.1% in the prior quarter, and the operating margin of 30.3% also declined from 31.6% in Q1, signaling some pressure on profitability. The balance sheet is solid with a manageable debt load and strong cash generation, evidenced by a debt-to-equity ratio of 0.71, a current ratio of 1.40, and trailing twelve-month free cash flow of $682.87 million; this substantial FCF, which supports shareholder returns via dividends and buybacks, coupled with a high return on equity of 27.3%, indicates a financially healthy company capable of self-funding its operations and growth initiatives.
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 the company's consistent profitability (Net Income > 0), the primary valuation metric is the Price-to-Earnings (PE) ratio. FactSet's trailing PE ratio stands at 23.7x, while its forward PE is significantly lower at 11.9x; this substantial gap implies the market is pricing in a sharp deceleration in earnings growth or potentially a near-term earnings decline. Compared to sector averages, FactSet's trailing PE of 23.7x and Price-to-Sales (PS) ratio of 6.1x are not directly comparable without a provided industry benchmark, but the stock's valuation has contracted dramatically from its own historical peaks. Historically, the stock's own trailing PE has ranged from lows near 15x (as seen in Q2 FY2026 data) to highs above 45x in recent years; at 23.7x, it sits above the lower end of its historical band but far below prior cyclical highs, suggesting the market has de-rated the stock due to growth concerns, though it may not be at absolute bargain levels relative to its own history.
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 financial risks from its decelerating revenue growth, which slowed to 7.1% in Q2, and compressed profitability, with net margin falling 330 basis points quarter-over-quarter. While the balance sheet is solid with a D/E of 0.71, the company's high dependence on buy-side clients (over 80% of subscription value) creates revenue concentration risk if this segment cuts spending. The substantial free cash flow of $683M provides a buffer, but continued margin pressure could erode this strength if growth does not re-accelerate.
Market & Competitive Risks: The primary market risk is sustained valuation compression. Trading at a forward P/E of 11.9x, the stock has already been de-rated, but further multiple contraction is possible if 'AI-phobia' continues to drive sector-wide selling, as noted in recent news. The stock's low beta of 0.69 indicates the sell-off is company/sector-specific, not broad market-driven, highlighting the acute competitive and disruptive fears. Regulatory or macro shifts that prolong high interest rates could further pressure client budgets and growth stock valuations.
Worst-Case Scenario: The worst-case scenario involves a perfect storm of competitive disruption from AI-native platforms, sustained high interest rates leading to client attrition, and consecutive earnings misses that trigger a loss of investor confidence. This could lead to a retest and break below the recent 52-week low of $185. Given the current price of $232, this scenario implies a realistic downside of approximately -20%. A more severe drawdown could approach the stock's maximum historical drawdown of -59.85%, though that would likely require a fundamental deterioration beyond what is currently evident.
FAQ
The key risks are, in order of severity: 1) Competitive/Disruptive Risk: 'AI-phobia' materializing into actual market share loss to nimbler, AI-driven data platforms. 2) Growth Risk: Revenue growth decelerating further from the current 7.1%, potentially into low single digits, which would crush the valuation. 3) Profitability Risk: Continued compression of net margins from the Q2 level of 21.8%, eroding earnings and cash flow. 4) Sentiment Risk: The lack of analyst support and prevailing negative sector narrative could keep the stock depressed regardless of fundamentals, leading to prolonged underperformance.
The 12-month forecast presents three scenarios. The Base Case (60% probability) sees the stock trading between $220 and $260 as growth stabilizes around 6-7% without a clear catalyst. The Bull Case (25% probability) projects a range of $300 to $350, driven by growth re-acceleration and a sector sentiment rebound. The Bear Case (15% probability) warns of a drop to the $185-$210 range if growth slows further and competitive fears intensify. The most likely outcome is the base case, implying minimal returns from the current $232 price, with the key assumption being that FactSet's core business proves resilient but unexciting.
FDS appears fairly valued relative to its current risk profile. The forward P/E of 11.9x is low and suggests undervaluation if earnings estimates hold. However, this must be weighed against the trailing P/E of 23.7x, which indicates the market expects a sharp earnings deceleration. The Price-to-Sales ratio of 6.1x is elevated for a company with 7% growth, suggesting the market is still paying for historical quality. Overall, the valuation implies the market expects subdued growth and persistent competitive threats, making the stock fairly priced but not obviously cheap without a growth re-acceleration.
FDS is a high-risk, potentially high-reward stock that may be a good buy only for specific investors. For value-oriented contrarians with a long-term horizon who can tolerate volatility, the forward P/E of 11.9x and strong free cash flow yield are attractive. However, given the decelerating growth (7.1% YoY), margin pressure, and overwhelmingly negative analyst sentiment, it is not a good buy for growth investors or those seeking near-term catalysts. The investment hinges on a belief that the current price fully reflects the bear case and that the company's competitive moat is more durable than the market fears.
FDS is unsuitable for short-term trading due to its low beta (0.69), lack of near-term catalysts, and negative momentum. It is primarily a long-term investment for investors betting on a multi-year turnaround and valuation mean reversion. The substantial dividend (1.13% yield) and buyback capacity support a long-term hold, but investors must be prepared for potential further volatility and a holding period of 3-5 years to allow the competitive landscape to clarify and for the company's strategic response to AI to bear fruit. A minimum holding period of 18-24 months is suggested to weather near-term earnings cycles.