Fannie Mae, Freddie Mac shares tumble after conservatorship comments
On Friday, Goldman Sachs adjusted its stance on Bentley Systems Inc . (NASDAQ:BSY), downgrading the stock from a Neutral to a Sell rating, and concurrently reducing the price target from $51.00 to $42.00. The revision followed Bentley Systems’ announcement of its fourth-quarter results and future guidance. According to InvestingPro data, the stock currently trades at a P/E ratio of 63.4x, suggesting a premium valuation compared to peers. The company maintains impressive gross profit margins of 81%.
The company reported a currency-converted Annual Recurring Revenue (ARR) growth of 12%, which slightly exceeded the guidance’s midpoint by 25 basis points. This growth, complementing the company’s overall revenue growth of 10.2% in the last twelve months, was driven by strong E365 renewal activity, successful initiatives targeting smaller market segments, particularly a 3 percentage point ARR contribution from Virtuosity, and consistent performance across various industries and regions, with Europe, the Middle East, Africa, and Public Works sectors particularly noted for their robust results.
Despite these positive outcomes, Bentley Systems’ shares experienced a modest decline, dropping 3.6% since the earnings report on February 26. This underperformed the NASDAQ’s 2.5% decrease during the same period. Goldman Sachs analysts attribute the market’s reaction to a mix of the solid fourth-quarter performance, which included a beat on ARR and Free Cash Flow (FCF), and the initial Fiscal Year 2025 ARR guidance. The guidance suggests a growth of 10.5% to 12.5% in constant currency, which is a slight decrease of 25 basis points below the midpoint of the Fiscal Year 2024 guidance. The softer outlook is partially ascribed to the ongoing challenges in the China market. InvestingPro analysis reveals the stock is trading near its 52-week low, with analyst targets ranging from $45 to $63.
Goldman Sachs’ updated assessment reflects a recalibration of expectations for Bentley Systems’ future performance in light of the recent financial results and the company’s projections for the coming years. The new price target of $42 represents a significant adjustment from the previous $51 mark, indicating revised investor expectations for the stock’s valuation. For deeper insights into Bentley Systems’ valuation and growth prospects, InvestingPro subscribers can access comprehensive financial health scores and 12 additional exclusive ProTips.
In other recent news, Bentley Systems Inc. reported its fourth-quarter 2024 earnings, revealing earnings per share of $0.21, which did not meet the forecasted $0.22. Revenue also fell short of expectations, coming in at $349.8 million against a forecast of $351.35 million. Despite these misses, Bentley Systems demonstrated a 13% year-over-year revenue increase, largely driven by a 16% growth in subscription services, which now account for 90% of total revenues. Additionally, the company launched OpenSight Plus, its first AI-powered infrastructure engineering application, marking a significant step in its strategic initiatives.
Oppenheimer analysts recently downgraded Bentley Systems’ stock rating to Perform from Outperform, citing a lack of clear catalysts to drive the company’s shares forward in the competitive AI market. They noted that while Bentley Systems maintains solid fundamentals, its growth algorithm is moderating, leading investors to seek growth opportunities elsewhere. The analysts adjusted their forward estimates for the company, reflecting a balanced risk/reward scenario. Bentley’s executives emphasized the transformative impact of AI and the challenges faced in the Chinese market, which continues to affect performance. For 2025, Bentley Systems projects total revenues between $1.461 billion and $1.490 billion, with subscription revenue growth expected to range from 10.5% to 12.5%.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.