FactSet Downgraded By Morgan Stanley

From Benzinga:

The Analyst

Morgan Stanley’s Toni Kaplan downgraded FactSet Research Systems from Equal-Weight to Underweight, while reducing the price target from $264 to $263.

The Thesis

FactSet Research Systems’ stock has appreciated around 47% year to date, outperforming Morgan Stanley’s Analytics coverage average and the S&P 500, Kaplan said in the downgrade note.

Most of the share price rally has been driven by multiple expansion, with investors seeking high quality stocks, the analyst mentioned. He expressed concern, however, regarding the company’s earnings growth prospects.

Kaplan mentioned that FactSet’s EPS growth in 2020 may fall to the lowest that the company has generated in the last four years. This is expected due to moderating annual subscription value (ASV), along with lower margin expansion.

While ASV growth at Research, which accounted for 46% of 2018 ASV, could turn negative, pricing pressure is expected to intensify with growing competition, the analyst said.

Following the share price rally, FactSet’s stock now trades at a premium to many Analytics stocks that have better growth prospects.

The stock has been down as much as 4.9% today.

Posted by on July 16th, 2019 at 2:17 pm


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