Last Update 10 Jan 26

Fair value Decreased 3.64%

FDS: AI Data Access And Buybacks Will Support Balanced Fair Value Outlook

Analysts have inched their price target on FactSet Research Systems up by US$1 to US$321, citing updated assumptions for fair value, discount rate, revenue growth, profit margin, and future P/E that are broadly consistent with recent sector research.

Analyst Commentary

Bullish analysts are making only a modest adjustment to their fair value work, with the price target moving to US$321, which suggests their core thesis on FactSet Research Systems remains largely intact.

Bullish Takeaways

Bullish analysts see the slight increase in fair value as consistent with broader Business Services coverage, which they view as supported by opportunities in areas like ratings and insurance brokerage.
The updated assumptions on discount rate and future P/E imply that bullish analysts are comfortable with how FactSet is being valued relative to sector peers using similar frameworks.
By explicitly linking the target to expectations on revenue growth and profit margin, bullish analysts appear to see room for solid execution without needing aggressive forecasts to justify their models.
The maintained stance on the shares suggests that, in their view, current pricing is roughly aligned with fair value, which can appeal to investors who prefer names where valuation work is closely tied to sector-wide research.

Bearish Takeaways

Bearish analysts point to headwinds in insurance premiums as a reminder that parts of the wider Business Services group face pressure that could indirectly influence sentiment toward FactSet.
GenAI related disruptions are flagged as a risk factor, with concerns that shifts in how data and analytics are produced or consumed could challenge traditional business models and justify more conservative growth assumptions.
The In Line stance signals that some analysts do not see a clear margin of safety in the current valuation, which may limit enthusiasm for investors looking for a clear discount to fair value.
With only a US$1 move in the target, cautious voices might argue that the new valuation framework still leaves limited upside relative to execution risks tied to sector specific trends.

What's in the News

Shareholders approved a Third Amended and Restated Certificate of Incorporation, shifting the stockholder vote for written consent actions from a supermajority to a simple majority and removing outdated board declassification language. The updated charter was filed in Delaware and is now effective (Changes in Company Bylaws/Rules).
The company reaffirmed fiscal 2026 guidance, including GAAP revenue of US$2.423b to US$2.448b, GAAP diluted EPS of US$14.55 to US$15.25, operating income of US$720m to US$750m, and net income of US$550m to US$577m (Corporate Guidance).
FactSet increased its equity buyback authorization by US$600m to a total of US$1.0b and separately completed a tranche repurchase of 478,100 shares, or 1.27% of the company, for US$139.84m under a plan first announced on June 23, 2025 (Buyback Plan and Tranche Update).
The company launched a production grade model context protocol server that gives AI systems direct, governed access to nine key FactSet datasets, following an "Explorer" beta used by 45 firms and more than 800 institutional users (Product Related Announcement).
FactSet announced new distribution partnerships, including availability of its data via Amazon Quick Research for existing clients using AWS, a collaboration with Macrobond that brings FactSet equity and ETF datasets into Macrobond's macro platform, and a partnership with Arcesium to offer an integrated front to back office investment management solution across public, private, and alternative assets (Client Announcements and Strategic Alliances).

Valuation Changes

Fair Value: moved from US$333.19 to US$321.06, a modest downward adjustment in the modelled price target range.
Discount Rate: edged down slightly from 8.45% to 8.42%, indicating only a small tweak to the risk and return assumptions.
Revenue Growth: trimmed from 5.41% to 5.31%, reflecting a marginally more conservative top line outlook in the model.
Net Profit Margin: adjusted from 25.39% to 25.14%, a small reduction in assumed profitability levels.
Future P/E: reduced from 21.55x to 20.07x, signalling a lower valuation multiple applied in the updated analysis.

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.What are the underlying business or industry changes driving this perspective?

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 Earnings and Revenue Growth

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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