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FactSet Research Systems Inc. (FDS) shares edged up despite missing consensus estimates. For the third fiscal quarter ended May 31, EPS fell 4% on a 6% revenue increase. Organic revenue gained 4.4%.
 

Factset Research Systems Inc. (FDS)
 

The company blamed margin contraction on higher amortization of previous research and development expenses on technology and a difficult comparison due to a lower bonus accrual and a one-time payroll tax adjustment in last year’s quarter.

On a two-year stacked basis, EPS is up only 7% annually. Organic Annual Subscription Value (ASV) grew 4.5%. In confirming its previous guidance range, management said that new business looks strong in the fourth quarter.

Full-year guidance calls for 3%-7% revenue growth, organic ASV growth of 4.5%-5.9%, and adjusted EPS growth of 2%-6%. The midpoint of the range implies Q4 adjusted EPS growth of 12%, about two points ahead of analyst consensus estimates.

Recommended Action: Buy FDS.

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