Analyst Note| Rajiv Bhatia, CFA |
Narrow-moat-rated FactSet reported a mixed end to its fiscal 2022. On the one hand, revenue grew 10% organically to $499 million, which beat the FactSet consensus estimate of $487 million. On the other hand, adjusted EPS of $3.13 missed the consensus estimate of $3.21 as operating margins were flat from the year-ago period despite the inclusion of the higher-margin CUSIP business in the quarter. Shares of FactSet were down about 7% after the firm’s earnings call, which we attribute to the margin outlook disappointing some investors and investors being less forgiving at the firm’s current valuation. However, we are increasing our fair value estimate to $365 from $340 due to a higher revenue outlook and time value of money partially offset by tempering our operating margin expansion expectations.