Leading financial and economic information provider FactSet Research Systems Inc. (NYSE:FDS) recently disclosed that it has acquired Market Metrics Inc., a market research firm situated in the United States that is solely focused on surveys conducted on advisor and insurance products. The company did not provide any pecuniary details of the acquisition, but believes that the acquisition will not have a major impact on its fourth quarter 2010 and fiscal 2011 diluted earnings per share.
Market Metrics conducts around 20,000 surveys on brokers, research analysts, advisors and gatekeepers every year. These databases and reports are used by the senior management of different companies for formulating strategies. The acquisition will help FactSet improve its product offerings and gain access to Market Metrics’ customers.
FactSet provides investment banking solutions for professionals that include the tracking of market performance and headlines. Besides, the company also produces research materials for public and private companies, as well as financial documents related to SEC filings and annual reports. Merger and acquisition documents and financial models, which are used by finance departments of different organizations, are also prepared by the company. Demand revival is eminent in this sector with the revival in the global economy.
FactSet has reported decent second quarter 2010 numbers, with EPS exceeding the Zacks Consensus Estimate and revenue remaining almost flat on a year-over-year basis. The company is witnessing some benefits from investments made during the downturn, besides the highest quarterly user growth in two years. This apart, FactSet has a healthy cash balance.
However, with the gradual recovery of the financial markets, spending on investment tools is slowly picking up. The company operates in a highly competitive market and its acquisition-for-growth strategy may backfire if the acquired companies do not generate substantial returns.
As such, we maintain our Neutral rating on FactSet stock.