11:25 AM EDT, 09/03/2024 (MT Newswires) -- FactSet Research Systems' ( FDS ) margins could drop to 35% to 36% in fiscal 2025 as it would likely accelerate investments, RBC Capital Markets said in a note emailed Tuesday.

The firm said it expects FactSet, which is set to release results for Q4 of fiscal 2024 on Sept. 19, to guide fiscal 2025 annual subscription value growth of $110 million to $155 million, revenue growth of 4% to 5% and margins of 35% to 36%, leading to "flattish" year-over-year earnings per share that year.

"Given the three strategic investments, namely market data expansion, client workflow, and [generative artificial intelligence]... we believe margins could decline in [fiscal 2025]," RBC said. "Positively, the company has a solid track record on these organic investments and acquisitions and the ability to accelerate revenue growth."

RBC called earnings a "potential clearing event" as the company benefits from the capital market recovery next year. The firm estimates fiscal Q4 earnings of $3.50 per share on revenue of $549 million, versus consensus estimates of $3.62 and $547 million, respectively.

RBC maintained the company's sector perform rating and $464 price target.

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