Friday, December 21, 2007


Stock is down several points from its recent earnings release yet so far the only change in fundamentals is estimates have stopped rising. They are meeting numbers and showing impressive metrics (subsrciber numbers) yet their guidance is around consensus to a shade below consensus. So the reaction by investors is to lower the multiple. Makes some sense although my thought is that the problems in the industry are in the fixed income area and that is a meaningless area to Factset.

77% of revenues are from buy side clients -- without a concentration in client or client type (long only vs. hedge fund, etc.). That leaves only 23% from sell side clients -- all on the equity or investment banking side so no fixed income to lose.

Stock's PE will fight an uphill battle as long as brokers are suffering losses and layoffs but I believe the business will not miss -- they will continue their growth streak.

From a stock perspective though, I find Moody's more attractive -- Moody's has fallen further, is cheaper and has even better profitability metrics vs. FDS. No reason to sell FDS but for now the incremental dollars will go to MCO. If FDS falls further, will have to reconsider and potentially buy more.

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