UBS’ Bottom Quant Stocks In AI, IT, Healthcare & Others: 29 Stocks In All Sectors

3. FactSet Research Systems Inc. (NYSE:FDS)

Number of Hedge Fund Investors In Q2 2024: 28

Sector: Financials

FactSet Research Systems Inc. (NYSE:FDS) is one of the most well-known financial data products and services providers in the world. Its services-based revenue creates the opportunity for a high-margin business. This business also benefits from FactSet Research Systems Inc. (NYSE:FDS)’s ability to land large deals and then earn stable recurring revenue. At the same time, higher stock market activity and investor interest create higher demand for its services. As a result, a lower interest rate environment carries the chance to let FactSet Research Systems Inc. (NYSE:FDS) grow its revenue. This trend was already evident in the firm’s fiscal fourth quarter earnings report which saw the shares rise by 3.2% during the day. During the quarter, FactSet Research Systems Inc. (NYSE:FDS) beat analyst $3.62 in analyst EPS estimates by posting $3.74 in the segment and grew its projected subscription revenue by 4.8% to $2.27 billion.

During the Q4 2024 earnings call, FactSet Research Systems Inc. (NYSE:FDS)’s management shared insights about these trends:

“Turning now to our financial results. In the fourth quarter, we added $54 million of ASV, which was in line with what we delivered in Q4 last year. This was driven by several large multiyear renewals and seven-figure competitive displacements across multiple firm types. For our organic ASV performance by region, in the Americas, we had 6% growth strength from strategic wins in wealth and momentum from long-term renewals on the sell-side were offset by softness on the buy-side. In the EMEA region, growth decelerated to 2%. Gains from wealth were offset by headwinds to retention on the buy-side across the region, as market conditions continue to constrain the budgets of our mid to large-sized asset manager clients. In particular, one-third of the deceleration in the quarter was the result of a cancellation by one large buy-side client.

In the Asia Pacific region, we delivered growth of 7%. Wins across wealth with our analytics product suite and data solutions were offset by higher erosion from banking and asset management clients. Now looking at trends by firm types. Wealth management was the largest contributor to our ASV growth in fiscal 2024. Even with one-time loss earlier in the year of a client in-sourcing one of our services. In the fourth quarter, we experienced strong demand, and organic ASV growth accelerated to 12% for the year led by multiple large enterprise deals in the long-term renewal. These large wins in the fourth quarter build on our competitive displacement of an incumbent at a marquee wirehouse client in the first quarter. In the fourth quarter, we secured a win against the same competitor in the Canadian market, where we now hold significant share with three of the region’s top five wealth managers.”