Analysts Maintain Positive Outlook on FactSet's Earnings Growth

Analysts Maintain Positive Outlook on FactSet's Earnings Growth

BMO Capital has upheld its Market Perform rating on shares of FactSet Research Systems (NYSE:FDS) with a targeted price of $440.00. Their analysis highlighted FactSet's recent earnings report, which showcased an adjusted earnings per share (EPS) that surpassed expectations due to impressive margins.

When comparing year-over-year results, the company achieved a stable performance, reporting an organic revenue increase of around 5%. However, the growth rate of its organic Annual Subscription Value (ASV) experienced a slight slowdown.

In a notable development, FactSet introduced its first outlook for the fiscal year 2025, which aligns with the upper consensus estimates. The company also announced an upcoming investor day set to occur in November, presenting a significant opportunity for stakeholders to gain insights into its strategic direction and performance.

Stock shares of FactSet Research Systems saw positive movement in pre-market trading following the earnings announcement. This reaction signifies that the market has perceived the company's performance and the investor day announcement favorably, as reflected in the stock's pre-open activity.

With the investor day approaching, both investors and analysts are eager for insights into the company's future strategies. It's important to note that FactSet does not plan on updating any of its forecasts until the release of its first-quarter earnings for the fiscal year 2025.

FactSet has recently reported strong fourth-quarter results that exceeded analyst projections. Their adjusted EPS stood at $3.74, surpassing the consensus of $3.62, while revenue experienced a year-over-year growth of 4.9%, totaling $562.2 million—another figure that exceeded expectations of $546.76 million.

Capacity to maintain strong operating margins was evident as FactSet’s adjusted operating margin increased to 35.8%, up from 33.4% the previous year, driven largely by reduced compensation costs.

However, Wolfe Research maintains an underperform rating on FactSet shares. Their reasoning stems from concerns regarding management commentary concerning revenue growth trajectories and various factors affecting year-over-year margin trends.

Despite this, Wolfe Research indicated an uptick in FactSet's client and user base compared to the fourth fiscal quarter of 2023, suggesting a potentially improving demand landscape for the company's services.

FactSet's earnings guidance for fiscal 2025 of $16.80-$17.40 per share is a departure from the Wall Street average of $17.36. Notably, the company's revenue estimate of $2.29-$2.31 billion aligns well with the consensus estimate of $2.30 billion, underscoring its steadfast performance amid market fluctuations.

InvestingPro Insights

For those keen on analyzing FactSet Research Systems’ financial landscape, InvestingPro offers real-time insights. The company boasts a solid market capitalization of $17.0 billion, with a P/E Ratio of 33.36, indicating a premium valuation.

It’s important to take note of its PEG Ratio of 17.74, reflecting the premium being paid for growth relative to current earnings. Despite this high valuation, FactSet has demonstrated a strong commitment to shareholder returns, having increased its dividend for 26 consecutive years, resulting in a current dividend yield of 0.93%.

The company continues to exhibit robust revenue growth, achieving a 6.23% year-over-year increase as of Q3 2024, corroborating the positive trends noted in its recent earnings report. Additionally, FactSet’s Gross Profit Margin stands at an impressive 53.26%, illustrating the company’s capacity to thrive while expanding its market presence.

Experts suggest that while FactSet's current trading metrics indicate a high earnings multiple and elevated P/E ratio relative to short-term earnings growth, its historical performance offers strong returns over the last decade. This track record could be appealing to long-term investors contemplating the company's prospects.

This article is generated with the assistance of AI and has undergone editorial review for accuracy. For further details, consult the terms and conditions.

Frequently Asked Questions

What is the current stock target for FactSet?

The current stock target for FactSet Research Systems (NYSE:FDS) is set at $440.00 by BMO Capital.

How did FactSet perform in its recent earnings report?

FactSet reported an adjusted earnings per share of $3.74, exceeding analyst expectations and a revenue of $562.2 million, which also surpassed forecasts.

What are FactSet's revenue growth expectations for fiscal 2025?

FactSet expects its revenue to be between $2.29 billion and $2.31 billion for fiscal 2025, aligning closely with industry consensus.

When is FactSet’s upcoming investor day scheduled?

The investor day for FactSet Research Systems is scheduled for November 14, 2024.

How has FactSet's dividend policy contributed to its appeal?

FactSet has raised its dividend for 26 consecutive years, which emphasizes its commitment to returning value to shareholders and aligns with a dividend yield of 0.93%.

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