FactSet Research Systems’ (FDS) wealth cancellation that led to Q2 annual subscription value miss will likely weigh on the stock, RBC Capital Markets said in a note emailed Friday.
The company said the loss was a one-off event, but RBC said it expects headwinds from client services to affect the Q3 ASV, adding that investors are worried about potential additional client cancellations.
“[FactSet] lowered ASV guidance to the lower end but highlighted a strong pipeline and 4Q23 ASV ramp,” RBC said. However, the ASV guidance for the fiscal second half remains uncertain, which is notable due to prolonged sales cycles, subdued financial services hiring, heightened erosion in banking, lower retention in private equity and venture capital, and increased competition, it added.
“[FactSet] is seeing a healthier pipeline in [second half] vs [first half] made up of several 6-7 figure deals,” RBC said, adding that the company is experiencing robust performance in Data Solutions, Middle Office, and Quant Solutions.
RBC has a sector perform rating on FactSet with a price target of $464.