What Happened?
Shares of financial data provider FactSet (NYSE: FDS) jumped 3.3% in the morning session after UBS upgraded its rating on the company's stock from 'Neutral' to 'Buy', viewing the recent steep sell-off as an attractive entry point. The upgrade came even as the firm lowered its price target on the stock to $425 from $480. Analysts pointed to the stock's significant decline of over 39% year-to-date, which brought it near a 52-week low. That slump followed mixed fourth-quarter results and a weak earnings forecast that worried investors. However, UBS argued the negative reaction was excessive. The firm believed the market underestimated how essential FactSet's products are and noted the company's ability to quickly integrate Artificial Intelligence (AI) technology, countering fears of disruption.
After the initial pop the shares cooled down to $295.37, up 2.2% from previous close.
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What Is The Market Telling Us
FactSet’s shares are not very volatile and have only had 2 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock dropped 3.4% on the news that the company reported fourth-quarter earnings that missed analyst expectations and provided a disappointing forecast for fiscal year 2026. The financial data firm posted fourth-quarter adjusted earnings of $4.05 per share, which fell short of the consensus estimate of $4.15. Looking ahead, the company's outlook also concerned investors. FactSet projected its adjusted earnings for fiscal 2026 to land between $16.90 and $17.60 per share, notably weaker than the Wall Street consensus of $18.30. Analysts reacted to the news with caution. BMO Capital pointed to a miss on profit margins, driven by higher technology expenses and increased bonus payments, as it cut its price target on the stock. Barclays also trimmed its price target significantly, from $390 down to $300, while keeping its "Underweight" rating.
FactSet is down 38% since the beginning of the year, and at $295.37 per share, it is trading 40.4% below its 52-week high of $495.72 from November 2024. Investors who bought $1,000 worth of FactSet’s shares 5 years ago would now be looking at an investment worth $871.80.
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