FactSet Research Systems Inc. (FDS) provides financial information, analytical applications and services globally. It recently acquired Cobalt Software, which provides portfolio monitoring solutions to the private capital industry.
Let’s have a look at FactSet’s recent fourth-quarter Fiscal 2021 financials and understand what has changed in its key risk factors that investors should know.
Revenue rose 7.4% year-over-year to $411.9 million, beating analysts’ estimates by $7 million. The growth was witnessed on the back of increased sales in analytics, content and technology solutions (CTS), and research.
Furthermore, the operating margin expanded to 28.9% from 25.7% a year ago. Earnings of $2.88 per share surpassed the Street’s estimate by $0.15 per share. (See Insiders’ Hot Stocks on TipRanks)
The CEO of FactSet, Phil Snow, said, “As we planned, two years of accelerated investment in content and technology is paying dividends. We enter next fiscal year with momentum and believe our strategy to scale our content refinery and create personalized workflow solutions will increase our market share.”
Looking ahead to Fiscal Year 2022, FactSet anticipates revenue between $1.7 billion and $1.72 billion. Earnings per share are estimated to be in the range of $12 per share to $12.30 per share.
On October 7, RBC Capital analyst Ashish Sabadra reiterated a Buy rating on the stock and increased the price target to $453 from $425. Sabadra noted that offerings such as data-as-a-service, cloud migration, open architecture, and APIs are boosting adoption and new use cases for the company, which should accelerate revenue growth in the future.
Overall, the Street has a Hold consensus based on 2 Buys, 4 Holds and 2 Sells. The average FactSet price target of $392.13 implies downside potential of 9.4%.
Now, let’s look at what has changed in the company’s key risk factors.
According to the new Tipranks’ Risk Factors tool, FactSet’s main risk category is Tech & Innovation, which accounts for 29% of the total 24 risks identified for the stock. In its recent annual report, the company has changed one key risk factor under the Tech & Innovation risk category.
FactSet highlights that to provide digital services to clients, it relies on IT infrastructure that is internally managed. Additionally, reliance is also placed on third-party service providers for critical functions.
The company acknowledges that it faces risks from system failures, security breaches and cyber-attacks. These attacks are becoming increasingly sophisticated, frequent and difficult to detect. In the event of a successful cyberattack, FactSet may face damage to its brand and reputation, loss of business and attract lawsuits.
The Tech & Innovation risk factor’s sector average stands at 20%, compared to FactSet’s 29%. Shares are up 34.3% over the past year.
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