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Tuesday, Piper Sandler reiterated an Overweight rating on Bentley Systems Inc . (NASDAQ:BSY), with a steady price target of $57.00. The firm’s analysts expressed a positive outlook for the company’s fourth-quarter results, which are scheduled for February 26, citing three main reasons for their optimism.
Firstly, Bentley Systems’ performance post-third quarter has significantly underperformed compared to its peers, showing a 10% decline versus a 6% increase amongst its competitors. Secondly, the company’s valuation has dipped to near a three-year low, now trading at less than 30 times next twelve months (NTM) EBITDA, which is a decrease from its three-year average of approximately 36 times forward EBITDA. The company maintains impressive gross profit margins of 80.78% and projects 10% revenue growth for 2024. According to InvestingPro analysis, BSY is currently trading near its Fair Value. Lastly, Piper Sandler believes that the forward Annual Recurring Revenue (ARR) projections for Bentley Systems are conservative and could potentially be exceeded, offering upside potential for Q4 ARR and the year 2025. This comes despite the consensus estimates indicating a decline in net new ARR for the upcoming year.
The analysts also noted that foreign exchange rates could pose a challenge, as Bentley Systems generates around 35% of its revenue in currencies other than the US dollar. This is less than what investors might expect given the company’s 58% international revenue exposure. Despite this, the firm views the currency impact as a modest headwind to the company’s reported results in US dollars.
Investors are watching closely as Bentley Systems approaches its fourth-quarter earnings release, to see if the company can outperform the conservative estimates and overcome the potential foreign exchange obstacles highlighted by Piper Sandler.
In other recent news, Bentley Systems Incorporated reported its Q3 2024 financial results, indicating a 12% year-over-year growth in Annual Recurring Revenue (ARR) to $1.271 billion. The company also reduced its senior debt to $168 million while securing a new $1.3 billion credit facility. Strategic acquisitions, such as Cesium, and partnerships, particularly with Google (NASDAQ:GOOGL), are expected to enhance Bentley Systems’ 3D geospatial capabilities and infrastructure asset management. Despite challenges in China and delays in professional services revenue, the company maintains a positive outlook on its long-term investment strategy and the U.S. infrastructure investment landscape. JPMorgan, having initiated coverage on Bentley Systems, has given the stock a Neutral rating with a price target of $52. Additionally, Bentley Systems has appointed James Lee, a former Google manager, as its new Chief Operating Officer. These are recent developments for Bentley Systems.
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