FDS Stock: FactSet Got Cut in Half on AI Fears — Is This Wide-Moat Compounder a Buy?

FactSet (FDS) Q3 FY2026 — FactSet fell ~60% from its 2025 high (~$450) to ~$185 on AI-disruption fears — but Q3 revenue rose 6.4%, organic ASV grew 7.1%, EPS beat, and guidance was reaffirmed. FactSet is a wide-moat financial-data compounder (recurring ASV, ~34% margins, 27 straight years of dividend increases) that got de-rated from ~30x to ~15x on fears that AI kills the data terminal. The Q3 numbers refute imminent disruption — and the DCF lands ~$335 vs the ~$258 price. THE CALL: BUY (4/5, MODERATE) — base-case value ~$335 vs ~$258 today. KEY METRICS: - Q3 revenue $622.9M (+6.4%, organic +7.0%); adjusted EPS $4.53 (beat); free cash flow $254M (+11%) - Organic ASV +7.1% YoY to $2.48B (+$35.4M in the quarter) — the recurring base still growing - FY26 guidance reaffirmed: revenue $2.45-2.47B, adj op margin 34.0-35.5%, adj EPS $17.25-17.75 - Stock fell ~60% from ~$450 (2025) to ~$185 low on AI-disruption fears; now ~$258 (~43% below highs) - Valuation ~15x forward (vs ~28-30x 5-yr average and vs data peers ~30x); dividend raised 27 straight years - Owner-earnings DCF (base ~$600M, +6%/+9%, 8-10%): ~$335 fair value vs ~$258 price → ~30% upside - Peers (fwd P/E): S&P Global ~29x, MSCI ~30x, Moody's ~30x, FactSet ~15x - The one risk: AI/LLM disruption to the financial-data terminal model (unquantifiable) What to watch: organic ASV growth (the single best gauge of whether AI is biting), the AI narrative + any client churn, and a re-rating back toward the peer multiple Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.