FactSet Research Systems (FDS) delivered stronger-than-expected fiscal third-quarter annual subscription value growth, driven by accelerating artificial intelligence adoption, although higher compensation costs and strategic investments weighed on profitability, Morgan Stanley said in a Thursday note.

The analyst said organic ASV growth accelerated to 7.1%, surpassing expectations for a fifth straight quarter, while revenue also exceeded estimates on stronger new business, client retention, Commercial Excellence initiatives and continued double-digit growth in data solutions.

Morgan Stanley said adjusted operating margin missed expectations due to higher compensation and technology spending, though management maintained its full-year guidance and indicated revenue and earnings are trending toward the high end of the forecast range.

The firm highlighted continued AI momentum, saying stronger ASV growth among AI clients and broader adoption of FactSet's AI products, Model Context Protocol offerings and consumption-based pricing could support future growth.

Morgan Stanley maintained its equal weight rating on the stock and raised its price target to $230 from $228.