While FactSet Research Systems Inc (NYSE:FDS) reported strong ASV (annual subscription value) growth for the third quarter, driven to some extent by AI products, management indicated a "meaningful" margin recovery in the fourth quarter, according to RBC Capital Markets.

• FactSet Research Systems stock is moving in positive territory. What’s pushing FDS stock higher?

The FactSet Research Systems Analyst: Analyst Ashish Sabadra reiterated a Sector Perform rating and price target of $240.

The FactSet Research Systems Thesis: The company’s third-quarter organic ASV grew $35.4 million sequentially, exceeding consensus of $30 million, with the growth rate accelerating to 7.1% year-over-year, from 6.7% in the previous quarter, Sabadra said in the note.

Check out other analyst stock ratings.

The company delivered strong beats on revenues and earnings, while margins missed estimates, he added.

The company has entered the "early innings: in AI monetization, highlighting that around 10% of its ASV growth in the third quarter came "directly from discrete AI SKUs, compared to almost no contribution from last year," the analyst wrote.

He noted that:

  • Around 90% of FactSet Research Systems’ top 50 clients are using four or more AI products.
  • These clients are witnessing 50% faster ASV growth than the broader base.

Regarding the company’s MCP (Model Context Protocol, which allows AI models and LLMs to directly connect to external tools and data systems) clients, the analyst stated that:

  • There were around 450 MCP clients under contract or trial at quarter-end, which grew to over 550 post-quarter.
  • About 20 of the top 100 are using MCP on a paid basis.
  • Around 25% of MCP users adopted full Workstation contracts to better leverage the company’s full analytics and technology stack environment.

Sabadra further said that management’s 2026 guidance implies fourth-quarter performance of:

  • Sequential ASV growth of around $50-$80 million
  • Total revenue growth of around 2%-5% year-on-year to $608-$628 million
  • Total adjusted operating margin of 30.7%-36.8%
  • Adjusted earnings of $3.75-$4.25 per share

FDS Price Action: Shares of FactSet Research Systems had risen by 1.69% to $249.69 at the time of publication on Thursday.

Read Also: FactSet Research Systems Reports Q3 2026 Results: Full Earnings Call Transcript