The recent sell off in Factset Research Systems Inc (NYSE:FDS) shares over AI disruption fears has been overdone, according to analysts at UBS, saying investors underappreciate the stickiness of the financial digital platform’s solutions in a slow-moving industry.
As a result, they boosted their rating on the stock to ‘Buy’ from ‘Neutral’ but also lowered their target price to $425 per share from $480, citing the company’s growth outlook, which they say has become more uncertain.
“We expect near-term ASV (Average Subscription Value) growth to continue to accelerate, while the stock is pricing in low-single-digit growth, which should drive the shares higher,” the analysts wrote in a note to clients.
They added that FactSet has shown that it can integrate AI quickly, while the company is also executing well on other new initiatives.
In addition, UBS analysts stated that FactSet’s organic ASV growth of $82 million represented the largest quarter in the company’s history, as FactSet continues to execute well in the Wealth segment and new initiatives like real-time data and managed services gain traction.
"We think FactSet is deeply integrated in customers' workflows and remains in a strong position to be a trusted partner as clients navigate generational changes.”
FactSet stock was up about 2.4% to $296.15 in Monday afternoon trading.