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There Could Be Room For FactSet Shares To Pull Back Further

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Goldman Sachs believes FactSet Research Systems Inc (NYSE: FDS) shares could fall further following the company's fourth quarter EPS and revenue miss. The stock has already suffered a loss of about 7.5 percent.

Analysts Andrew Benjamin and Amanda Esposito maintained their Sell rating, while the target price was raised from $124 to $125, implying downside risks of about 23 percent. They are concerned over the slowdown in billings growth pace to 9 percent in the most recent quarter from 13 percent in the preceding two quarters.

In a note, the brokerage said, "While we continue to expect FDS to outgrow its desktop peers, recent results show it is not immune to the macro. We believe its growth will continue to slow due to growth and margin pressures for both Buy and Sell-side clients. At 16X NTM EV/EBITDA, we believe the stock is discounting double-digit EBITDA growth that seems unrealistic."

The analysts expects negative revision in EBITDA and compression in multiple driven by decelerated ASV growth pace from 10 percent in the third quarter to an estimated 7 percent in the first half of the fiscal year 2017.

The brokerage pointed out that its 2017 EBITDA estimate is 4 percent lower than the consensus. The target price is based on the lower EBITDA growth of 7 percent for the period 2016–2018 compared to 10 percent for Goldman Sachs coverage.

The stock traded at $162.23 at time of writing, shedding $2.11, or 1.28 percent.

Latest Ratings for FDS

DateFirmActionFromTo
Jun 2018Wells FargoMaintainsMarket PerformMarket Perform
Jun 2018Morgan StanleyMaintainsEqual-WeightEqual-Weight
Jun 2018Stifel NicolausMaintainsHoldHold

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