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Analyst Blog

It’s been over a week that FactSet Research Systems Inc. (FDS - Free Report) reported fourth-quarter fiscal 2016 results. Since then, shares of the company have been on a downtrend.

Since its last earnings release on Sep 27, the stock has lost 9.5%. The drop was because of the company’s lower-than-expected quarterly results and a tepid guidance for the forthcoming quarter.

The Global business information service provider’s fourth-quarter fiscal 2016 top and bottom line results, despite marking a strong year-over-year improvement, fell short of their respective Zacks Consensus Estimate.

Furthermore, during its last quarterly results, the company provided revenues and adjusted earnings per share (EPS) guidance for the first quarter of fiscal 2017, which was below the Zacks Consensus Estimate at the mid-point. FactSet anticipates revenues in the range of $286 million to $292 million (mid-point $289 million). The Zacks Consensus Estimate was pegged at $291 million at that time.

It anticipated adjusted EPS in the band of $1.68 to $1.72 (mid-point $1.70) while the Zacks Consensus Estimate stood at $1.72 at that time. Therefore, looking at the recently released numbers and outlook for the upcoming quarter, we expect a potential slowdown.

The Zacks Consensus Estimate for the stock has also been revised downward since its last quarterly results.

Furthermore, competition from Bloomberg L.P., Dow Jones & Company Inc., MSCI Inc. (MSCI) and Thomson Reuters, which are also introducing substitute products at competitive prices, is a headwind.

Zacks Rank & Key Picks

Currently, FactSet carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks worth considering in the broader technology sector are:

Ambarella Inc. (AMBA - Free Report) sporting a Zacks Rank #1. The stock has witnessed upward estimate revisions in the last 30 days and has a long-term EPS growth rate of 14.8%.

Broadcom Ltd. (AVGO - Free Report) also sports a Zacks Rank #1. The stock has witnessed upward estimate revisions in the last 30 days and has a long-term EPS growth rate of 15.0%.

AXT Inc. (AXTI - Free Report) holds a Zacks Rank #1. The stock has witnessed upward estimate revisions in the last 60 days and has a long term EPS growth rate of 20.0%. 

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