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On Friday, Citi analyst Tyler Radke adjusted the price target for ANSYS (NASDAQ:ANSS) to $371 from the previous target of $361, while maintaining a Neutral rating on the company’s shares. According to InvestingPro data, ANSYS is currently trading at $340.46, near its 52-week high of $363.03, with an overall financial health score rated as "GOOD." Radke highlighted ANSYS’s strong performance in the fourth quarter, with the company’s annual contract value (ACV) surpassing consensus estimates by 5 percentage points and revenue exceeding expectations by 4 percentage points on a constant currency (cc) basis.
The revenue outperformance was largely attributed to a 10% year-over-year growth in lease licenses, which exceeded both Citi’s and the consensus forecasts by 5 and 7 percentage points, respectively. ANSYS also demonstrated robust profitability, with operating margins beating estimates by 3 percentage points and earnings per share (EPS) coming in approximately 11 percentage points higher than anticipated. InvestingPro data reveals impressive gross profit margins of 92.48% and strong revenue growth of 12.11% over the last twelve months.
Despite the positive results, Radke noted that ANSYS will cease providing results and guidance for the foreseeable future due to the ongoing transaction with Synopsys (NASDAQ:SNPS). The analyst expressed continued neutrality regarding the stock, citing some concerns over the regulatory approval of the transaction.
The revised price target of $371 implies a 32x forward year 2026 enterprise value to free cash flow (EV/FCF) multiple. Radke’s adjustment in the price target is based on a less than 1 percentage point increase in top-line growth targets for ANSYS. InvestingPro analysis shows the stock trading at a high P/E ratio of 52.14, with 12 additional exclusive insights available to subscribers, including detailed valuation metrics and growth projections.
In other recent news, ANSYS reported a 10% increase in fourth-quarter revenue, reaching $882.2 million, surpassing expectations set by Rosenblatt Securities. The company also achieved operating margins of 53%, exceeding the anticipated 51%. In response, Rosenblatt adjusted its price target for ANSYS stock to $340, maintaining a Neutral rating. ANSYS’s annualized contract value rose by 12.8% in constant currency, with expectations for continued double-digit growth into fiscal year 2025. The company is also involved in a significant merger with Synopsys, anticipated to close in the first half of 2025, valued at approximately $340 per ANSYS share. In regulatory developments, the UK’s Competition and Markets Authority may accept proposed remedies from Synopsys and ANSYS, which include divesting certain product lines. Additionally, ANSYS has announced an enhanced partnership with Concepts NREC to streamline turbomachinery design, integrating computational fluid dynamics software to reduce design cycles. Lastly, ANSYS is collaborating with Cognata and Microsoft (NASDAQ:MSFT) to enhance testing and validation of automotive sensors for advanced driver assistance systems and autonomous vehicles.
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