FactSet Shares Dip Despite Q2 Beat & Raised FY22 Outlook

FactSet (NYSE: FDS) reported stronger-than-expected fiscal Q2 results, topping both earnings and revenue estimates driven by robust business momentum. Further, the company updated FY2022 guidance ahead of the consensus expectations.

Despite the quarterly beat and raised outlook, shares of the global provider of integrated financial information and analytical applications were down 1.8% on March 24.

It seems investors did not welcome the company’s decision to suspend its share repurchase program.

Q2 Outperformance

Notably, Q2 adjusted earnings of $3.27 per share grew 20.2% year-over-year and significantly beat analysts’ expectations of $2.97 per share. The company reported earnings of $2.72 per share for the prior-year period.

Revenues jumped 10% year-over-year to $431.1 million and also exceeded consensus estimates of $426.38 million.

The increase in revenues reflected a surge in sales of research and advisory and analytics solutions as well as organic revenues, which increased 9.9% to $430.7 million.

Upbeat FY2022 Outlook

Based on robust fiscal Q2 results, management updated the financial guidance for FY2022.

The company now forecasts adjusted earnings in the range of $12.75 to $13.15 per share, while the consensus estimate is pegged at $12.55 per share. Revenues are forecast to be in the range of $1.80 billion and $1.83 billion, ahead of the consensus estimate of $1.74 billion.

Suspension of Share Repurchase Program

Citing repayment of debt as its top priority, FactSet suspended share repurchases under the program until at least the second half of fiscal 2023.

The company did not buy back shares during the second quarter and has $181.3 million available for repurchases under the existing share repurchase program.

However, it may make exceptions for potential minor repurchases to offset dilution from grants of stock options. It will give out more details at its Investor Day scheduled to be held on April 5 in New York City.

CEO Comments

FactSet CEO, Phil Snow, commented, “The investments we have made are paying off in our top line growth. Demand for differentiated content remains strong, which we intend to build upon with our leading open content and analytics platform. In addition, we welcome the CGS business to FactSet, which will continue to advance our data management strategy.”

Analysts Recommendation

According to TipRanks’ analyst rating consensus, FDS is a Hold, based on two Buys, one Hold, and one Sell ratings. The average Factset Research price target is $440.44, implying 9.3% downside potential.

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