FactSet
FDS
$213.52
-4.24%
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, high-margin player in the financial data and stock exchanges 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 AI-driven disruption in the financial data and software sectors, as evidenced by the stock's severe underperformance and recent analyst downgrades highlighting sector-wide 'AI-phobia'.…
FDS
FactSet
$213.52
Related headlines
Investment Opinion: Should I buy FDS Today?
Rating: Hold. The core thesis is that FactSet is a high-quality business caught in a disruptive sector narrative, making it a 'show me' story where the risk of permanent impairment is balanced against a deeply discounted valuation.
Supporting Evidence: The forward P/E of 11.75x prices in significant earnings recovery and is a deep discount to the trailing P/E of 23.71x. Revenue, while decelerating, is still growing at 7.07% with robust net margins above 21%. The company generates substantial free cash flow ($682.87M TTM) and returns capital to shareholders via buybacks and a 1.13% dividend yield. However, the lack of a clear analyst price target and prevalence of neutral/negative ratings underscores the uncertainty.
Risks & Conditions: The two biggest risks are accelerated competitive disruption from AI and a further deceleration in revenue growth below 5%. This Hold rating would upgrade to a Buy if the company demonstrates an effective AI strategy that stabilizes growth above 8% or if the forward P/E compresses further below 10x. It would downgrade to a Sell if quarterly revenue growth falls below 5% or operating margins contract below 28%. On balance, the stock appears fairly valued relative to the heightened risks it faces, but deeply undervalued if those risks are overstated.
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FDS 12-Month Price Forecast
The assessment is neutral, reflecting a stalemate between compelling value and legitimate existential risk. The stock is not a falling knife, given its strong fundamentals, but lacks a near-term catalyst for a re-rating. Confidence is medium because the outcome hinges heavily on management's ability to articulate and execute a credible AI strategy, which remains unproven. The stance would turn bullish on evidence of growth stabilization and margin resilience; it would turn bearish on confirmation of market share loss and accelerated growth deceleration.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on FactSet's 12-month outlook, with a consensus price target around $277.58 and implied upside of +30.0% versus the current price.
Average Target
$277.58
6 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
6
covering this stock
Price Range
$171 - $278
Analyst target range
Analyst coverage for FactSet appears limited in the provided data, with only 6 analysts providing estimates for revenue and EPS, and no explicit consensus price target, recommendation breakdown, or target range is available in the dataset. The institutional ratings data shows a recent pattern of neutral to negative sentiment, with firms like RBC Capital maintaining 'Sector Perform', Barclays and Wells Fargo reiterating 'Underweight', and Goldman Sachs issuing a 'Sell' rating in December 2025. This lack of a clear, quantifiable consensus target and the prevalence of Hold/Underweight/Sell ratings indicates limited bullish conviction among covering institutions, which aligns with the stock's severe underperformance and the narrative of sector disruption.
Bulls vs Bears: FDS Investment Factors
The evidence currently favors the bear case, driven by the overwhelming market narrative of AI-driven competitive disruption, which has triggered a severe valuation derating and analyst pessimism. However, the bull case presents a compelling counter-argument based on deep value, strong underlying profitability, and financial resilience. The single most important tension in the investment debate is whether FactSet's high-margin, subscription-based model is facing a permanent impairment from technological disruption, or if the current valuation excessively discounts this risk, creating a mispriced opportunity in a still-fundamentally sound business.
Bullish
- Deep Valuation Discount: The stock trades at a forward P/E of 11.75x, a steep discount to its trailing P/E of 23.71x and near the low end of its historical range. This implies the market is pricing in severe pessimism, creating a potential value opportunity if earnings stabilize.
- Robust Profitability & Cash Flow: The company maintains strong margins, with a net margin of 21.78% and generates robust free cash flow ($682.87M TTM). This financial health supports shareholder returns, evidenced by $163M in share repurchases last quarter.
- Strong Balance Sheet: A debt-to-equity ratio of 0.71 and a current ratio of 1.40 indicate a conservative capital structure with ample liquidity. This provides a buffer against market volatility and funds strategic initiatives.
- Stable, Recurring Revenue Base: Revenue grew 7.07% YoY to $611M, driven by the core subscription model with over 80% of value from buy-side clients. This provides predictable cash flows despite growth deceleration.
Bearish
- Severe Competitive & AI Disruption Risk: The dominant investment narrative is 'AI-phobia' disrupting financial data sectors, as highlighted by recent news. This existential threat is a primary driver behind the stock's 49.6% annual decline and analyst downgrades.
- Decelerating Revenue Growth: Quarterly revenue growth of 7.07% represents a moderation from prior high-single-digit rates. In a sector facing disruption, slowing top-line expansion raises concerns about the sustainability of the business model.
- Negative Analyst Sentiment & No Clear Target: Institutional ratings are neutral to negative (e.g., Goldman Sachs 'Sell'), with no explicit consensus price target provided. This lack of bullish conviction reflects deep-seated fundamental concerns.
- Operating Margin Compression: The operating margin declined to 30.27% in Q2 2026 from 31.61% in the prior quarter. A sustained downtrend could signal rising competitive pressures or investment costs, eroding profitability.
FDS Technical Analysis
The stock is in a pronounced and sustained downtrend, having declined 49.60% over the past year. With a current price of $227.68, it is trading near the bottom of its 52-week range, approximately 48% above the 52-week low of $185.00 but 52% below the 52-week high of $474.79; this positioning near the lows suggests a potential value opportunity but also reflects deep-seated fundamental concerns and significant technical damage. Recent momentum shows a modest short-term bounce, with the stock up 2.16% over the past month and outperforming the S&P 500 by 6.44%, yet this is against a backdrop of severe longer-term weakness, with a 20.08% decline over the past three months. This divergence could signal a temporary oversold rebound or consolidation, but the stock's beta of 0.724 indicates it has been less volatile than the market during this sell-off, which is atypical for a growth-oriented name and may suggest persistent institutional selling. Key technical levels are clearly defined, with major resistance at the 52-week high of $474.79 and immediate support at the recent low of $185.00; a sustained break below $185 would signal a continuation of the downtrend, while a recovery above the $250-$270 zone is needed to suggest a more meaningful base is forming.
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
-50.0%
Cumulative gain past year
| Period | FDS Return | S&P 500 |
|---|---|---|
| 1m | +0.7% | +0.4% |
| 3m | -27.5% | -2.0% |
| 6m | -24.6% | +4.1% |
| 1y | -50.0% | +23.9% |
| ytd | -25.1% | -0.3% |
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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 potential pressure on the core subscription business. The Americas segment, contributing $396.18 million, remains the primary growth driver, while the EMEA and Asia Pacific segments contributed $149.52 million and $61.93 million, respectively. Profitability remains robust with a net income of $133.06 million and a net margin of 21.78% for the quarter, supported by a solid gross margin of 51.43%; however, operating income of $184.96 million and an operating margin of 30.27% show some compression from the 31.61% margin in the prior quarter, warranting monitoring for a sustained trend. The company maintains a strong balance sheet and cash flow profile, with a debt-to-equity ratio of 0.71, a current ratio of 1.40, and robust free cash flow generation of $682.87 million on a trailing twelve-month basis; this financial health provides flexibility for shareholder returns, as evidenced by $163.03 million in stock repurchases and $40.97 million in dividends paid during the latest quarter.
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, the primary valuation metric is the Price-to-Earnings (PE) ratio. The trailing PE ratio stands at 23.71x, while the forward PE is significantly lower at 11.75x; this substantial gap implies the market expects a sharp recovery in earnings, likely factoring in cost management and a stabilization of the business model. Compared to sector averages, FactSet's trailing PE of 23.71x and Price-to-Sales (PS) ratio of 6.10x are not directly comparable without a provided industry average, but the stock's own historical context is telling. The current trailing PE of 23.71x is near the lower end of its historical range observed over recent quarters, which has spanned from approximately 15x to over 63x; trading at this level suggests the market is pricing in significant pessimism, viewing the stock either as a deep value opportunity or as facing permanent fundamental impairment.
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: While FactSet's balance sheet is strong, the primary financial risk is margin compression, as seen in the quarterly operating margin decline from 31.61% to 30.27%. Revenue growth deceleration to 7.07% YoY is also a concern, as the company's valuation historically depends on stable, high-margin growth. Dependence on the buy-side for over 80% of subscription value creates client concentration risk if asset managers consolidate or reduce spending due to competitive pressures or outflows.
Market & Competitive Risks: The paramount risk is competitive disruption, specifically from AI-driven platforms that could disintermediate traditional data aggregators. This 'AI-phobia' has led to severe sector-wide valuation compression, as noted in recent news. FactSet's valuation, while depressed historically, still carries a P/S ratio of 6.10x and a PEG ratio of 2.05, which may not be cheap enough if growth continues to slow. The stock's low beta of 0.724 suggests it has not participated in market rallies, indicating it is being treated as a value trap rather than a growth stock.
Worst-Case Scenario: The worst-case scenario involves a rapid loss of market share to AI-native competitors, leading to sustained mid-single-digit revenue growth, accelerating margin erosion, and multiple compression to deep-value levels. This could see the stock re-test its 52-week low of $185, representing a potential downside of approximately -19% from the current price of ~$227. A breach of that level could trigger a further decline towards the maximum drawdown level of -59.85% witnessed during this cycle, though such a move would likely require a fundamental breakdown in the business model.
FAQ
The key risks are, in order of severity: 1) Competitive/AI Disruption: The existential risk that new technologies displace FactSet's data aggregation and analytics services, as reflected in the sector-wide 'AI-phobia' narrative. 2) Growth Deceleration: Revenue growth has slowed to 7.07% YoY; a further slowdown could trigger additional multiple compression. 3) Margin Erosion: Operating margin declined to 30.27% last quarter; sustained pressure would hurt profitability. 4) Sentiment Risk: Overwhelmingly negative analyst sentiment (e.g., Sell ratings) can perpetuate selling pressure regardless of fundamentals.
The 12-month outlook presents three scenarios. The Base Case (55% probability) sees the stock trading between $240 and $280 as growth stabilizes in the mid-single-digits. The Bull Case (25% probability) targets $330-$380 on successful AI navigation and a valuation re-rating. The Bear Case (20% probability) risks a re-test of the 52-week low, with a range of $185-$210 if competitive pressures intensify. The most likely outcome is the Base Case, predicated on the assumption that the current fears persist but do not cause immediate, severe damage to the financials.
Based on traditional metrics, FDS appears deeply undervalued relative to its own history, trading at a forward P/E of 11.75x versus a trailing P/E of 23.71x. However, valuation must be contextualized by risk. The market is applying a steep discount due to fears of AI disruption and growth deceleration (7.07% YoY). Therefore, the stock is fairly valued relative to the heightened uncertainty it faces but would be considered undervalued if the company demonstrates its business model's durability. The current valuation implies the market expects minimal growth and significant competitive pressure.
FDS presents a high-risk, high-potential-reward opportunity. For value investors comfortable with sector disruption narratives, the forward P/E of 11.75x and strong cash flow generation may be attractive. However, given the severe competitive threats highlighted by analyst downgrades and the stock's 49.6% annual decline, it is not a good buy for growth-oriented or risk-averse investors. A purchase here is a contrarian bet that the market has overestimated the near-term AI threat to FactSet's entrenched business model.
FDS is unsuitable for short-term trading due to its low beta (0.724) and lack of near-term positive catalysts amid negative sentiment. It is a candidate for long-term investment (3-5 years) for investors who believe the AI disruption threat is overblown and that the company's strong cash flows and client relationships will allow it to adapt. The dividend yield of 1.13% and share buybacks provide a modest return while waiting for the thesis to play out. A minimum holding period of 18-24 months is suggested to allow for clarity on the competitive landscape.