Last Update20 Oct 25Fair value Decreased 0.33%
The analyst fair value estimate for FactSet Research Systems was modestly reduced from $339.25 to $338.13. Analysts cite ongoing margin pressures and increased investment needs, which are offsetting stronger subscription performance and continued confidence in the company's long-term positioning.
Analyst Commentary
Recent analyst commentary on FactSet Research Systems presents a divided outlook, with both bullish signals and cautions shaping the consensus.
Bullish Takeaways- Bullish analysts contend FactSet's business model is resilient. They view its franchise and client relationships as "sticky" and underappreciated by the market given current share price levels.
- There is recognition of FactSet's ability to quickly integrate artificial intelligence technologies, which demonstrates adaptability in an evolving competitive landscape.
- Several analysts point to organic subscription value growth exceeding expectations, suggesting underlying demand for FactSet's solutions remains strong despite broader uncertainty.
- Some believe recent share price underperformance may have already priced in much of the downside risk. This could create potential upside if management can execute on new strategic initiatives, particularly under new leadership.
- Bearish analysts highlight ongoing margin pressures stemming from increased investment and warn that these expenditures could dampen profitability well into fiscal 2026.
- Concerns persist about competitive threats posed by artificial intelligence advancements. Some suggest that rising competition could further compress margins.
- There is significant uncertainty around how long FactSet's elevated investment phase will last, and whether it will meaningfully accelerate the company's growth rate or merely help it maintain its current competitive position.
- Several valuation targets across the Street have been revised downward, reflecting skepticism regarding near-term improvement in financial performance and the impact of the company's strategic direction.
What's in the News
- FactSet has announced the general availability of IntelligentCross' JumpStart functionality within the Portware execution management system, making FactSet the first competitor to offer direct buy-side integration. The integration leverages artificial intelligence to enhance order matching and price stability in US equities. (Product-Related Announcements)
- The company has provided fiscal 2026 earnings guidance, expecting GAAP revenues between $2,423 million and $2,448 million, GAAP diluted EPS of $14.55 to $15.25, operating income of $720 million to $750 million, and net income of $550 million to $577 million. (Corporate Guidance, New/Confirmed)
- FactSet repurchased 258,672 shares for $106.17 million between June and August 2025, completing a larger buyback program totaling 683,911 shares for $300 million. (Buyback Tranche Update)
- The Board amended and restated its company bylaws to clarify procedural mechanics for director elections and implement a plurality voting standard for contested director elections. (Changes in Company Bylaws/Rules)
- FactSet announced new partnerships and integrations, including the addition of J.P. Morgan and Barclays analyst reports to its aftermarket research offering, and a partnership with Hebbia, enabling direct access to FactSet's data within the Hebbia platform. (Client Announcements)
Valuation Changes
- Fair Value: The analyst fair value estimate decreased modestly from $339.25 to $338.13.
- Discount Rate: The applied discount rate declined slightly, moving from 8.48% to 8.40%.
- Revenue Growth: Projected long-term revenue growth was virtually unchanged, increasing marginally from 5.39% to 5.39%.
- Net Profit Margin: The future profit margin estimate edged down, dropping from 25.37% to 25.35%.
- Future P/E: The forward price-to-earnings ratio estimate fell from 23.24x to 22.51x.
Key Takeaways
- Integration of acquisitions and new GenAI products is expanding service offerings and supporting revenue and ASV growth.
- Enhanced data solutions and operational productivity improvements are poised to sustain margins and bolster future revenue.
- Rising technology costs and asset management challenges may pressure FactSet's margins and hinder growth, with uncertain market conditions affecting revenue consistency.
Catalysts
About FactSet Research Systems- Operates as a financial digital platform and enterprise solutions provider for the investment community worldwide.
- FactSet is integrating new acquisitions like Irwin and LiquidityBook, adding immediate cross-sell opportunities and expanding services across buy-side and banking workflows, which will support revenue growth.
- The launch of new GenAI products, including Pitch Creator and conversational API, is expected to provide additional services that drive adoption and increase ASV growth, positively impacting future revenue.
- The company is implementing strategic initiatives in its wealth management segment, securing partnerships like the UBS deal, and this broad market share in the wealth sector should contribute to sustained ASV growth.
- FactSet is increasing its focus on data feeds, benefiting from strong demand for high-quality data solutions, which should bolster future revenue and margin expansion through increased enterprise-level sales.
- Focus on operational productivity, such as reducing third-party content costs and enhancing workforce efficiency through automation, underpins the company's confidence in maintaining its operating margins despite recent acquisitions.
FactSet Research Systems Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming FactSet Research Systems's revenue will grow by 5.7% annually over the next 3 years.
- Analysts assume that profit margins will increase from 23.3% today to 27.0% in 3 years time.
- Analysts expect earnings to reach $730.7 million (and earnings per share of $20.08) by about September 2028, up from $532.9 million today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 27.6x on those 2028 earnings, up from 26.5x today. This future PE is greater than the current PE for the US Capital Markets industry at 26.7x.
- Analysts expect the number of shares outstanding to decline by 0.48% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 8.33%, as per the Simply Wall St company report.
FactSet Research Systems Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- The slowing price increases tied to lower CPI levels could negatively impact FactSet's revenue growth, as demonstrated by a nearly $7 million headwind to ASV growth this quarter.
- Persistent challenges in the asset management and banking sectors, including ongoing cost rationalization and budget tightening, pose risks to revenue and retention which could unfavorably affect net margins.
- The market environment remains uncertain, particularly for banking, which has been a drag on growth; this uncertainty may continue to suppress revenue growth despite potential wins with new products.
- Increased technology expenses, noted as 31% higher mainly due to greater cloud and software costs, could pressure operating margins and require significant cost efficiencies elsewhere to offset.
- The execution risks tied to international expansion, given mixed results in regions like EMEA, could lead to inconsistent revenue performance and impact overall growth expectations.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $428.375 for FactSet Research Systems based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $500.0, and the most bearish reporting a price target of just $355.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.7 billion, earnings will come to $730.7 million, and it would be trading on a PE ratio of 27.6x, assuming you use a discount rate of 8.3%.
- Given the current share price of $372.86, the analyst price target of $428.38 is 13.0% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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