Oppenheimer cuts Bentley Systems stock rating to Perform

On Thursday, Oppenheimer analysts downgraded Bentley Systems Inc . (NASDAQ:BSY) stock rating to Perform from Outperform, removing the previous $56 price target. The change in rating follows a period where the company’s stock has been range-bound for nearly two years. According to InvestingPro data, BSY is currently trading near its 52-week low of $43.82, with a P/E ratio of 39x, suggesting rich valuation levels.

Despite acknowledging Bentley Systems’ strong business model and its position as a leader in physical AI, Oppenheimer analysts found it difficult to identify catalysts that could propel the company’s shares forward in a competitive AI market. They noted that while Bentley Systems deserves a premium multiple for its consistent execution and cash flow generation, investor preference currently leans towards companies with higher growth potential. InvestingPro analysis reveals impressive gross profit margins of 81% and revenue growth of 10.2% over the last twelve months.

The analysts emphasized that Bentley Systems’ fundamentals remain solid, with the business model showing resilience amidst a dynamic macroeconomic environment. However, they pointed out that the company’s growth algorithm is moderating, suggesting that investors are looking elsewhere for growth opportunities. InvestingPro subscribers have access to 12 additional key insights about BSY’s valuation and growth prospects, along with comprehensive financial health analysis showing a GOOD overall rating.

In light of these observations, Oppenheimer has adjusted its forward estimates for Bentley Systems. The firm now sees a balanced risk/reward scenario that supports a sustained performance in line with the market, rather than outperforming it as previously anticipated.

This rating change comes as Bentley Systems continues to operate in an industry where innovation and growth are highly valued by the investment community. The company’s consistent execution and cash flow are positive aspects but seem insufficient to attract the higher valuation multiples that come with more aggressive growth profiles.

In other recent news, Bentley Systems Inc. reported its Q4 2024 earnings, revealing a slight miss in forecasts with earnings per share at $0.21 compared to the expected $0.22. Revenue also fell short, totaling $349.8 million against a forecast of $351.35 million. Despite these misses, the company experienced a 13% year-over-year revenue increase, driven largely by a 16% growth in subscription services, which now make up 90% of total revenues. Bentley Systems also introduced OpenSight Plus, marking its entry into AI-powered infrastructure engineering applications. The firm maintains a cautious outlook for the Chinese market but projects 2025 revenues between $1.461 billion and $1.490 billion, with subscription revenue growth anticipated to range from 10.5% to 12.5%. Analysts from RBC and KeyBanc expressed optimism about Bentley’s strategic focus on AI and digital transformation, while highlighting challenges in the Chinese market. Additionally, Bentley Systems announced organizational changes, including the appointment of a new Chief Operating Officer, to enhance innovation and operational excellence.

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