Rosenblatt lifts ANSYS stock price target to $340 on strong Q4 results

On Thursday, Rosenblatt Securities adjusted its price target for ANSYS (NASDAQ:ANSS) stock, raising it to $340 from the previous figure of $335, while maintaining a Neutral rating on the shares. The adjustment follows ANSYS’s announcement of robust fourth-quarter performance, which surpassed expectations. According to InvestingPro data, ANSYS is currently trading at $341.57, near its 52-week high of $363.03, with analysis suggesting the stock is fairly valued at current levels.

ANSYS reported a 10% year-over-year increase in Q4 revenue, reaching $882.2 million, slightly above Rosenblatt’s forecast of $872.6 million. The company also reported operating margins of 53%, exceeding the anticipated 51%. For the fiscal year 2024, ANSYS achieved a 13% revenue growth in constant currency (CC), meeting its target for double-digit growth. This performance is considered strong, especially given the current macroeconomic conditions and in comparison to recent years. InvestingPro analysis highlights ANSYS’s impressive gross profit margin of 92.48% and overall strong financial health score, with 13 additional ProTips available to subscribers.

The company’s annualized contract value (ACV) saw a 12.8% rise in CC. ANSYS has set an expectation to maintain double-digit ACV growth for the fiscal year 2025. The North American market was particularly strong, with mid-single digit growth, while Europe also saw growth. Asia, excluding Japan, recorded a 10% increase in CC during the fourth quarter. Notably, the key verticals contributing to ANSYS’s ACV included High-Tech, Aerospace & Defense, and Automotive.

The total ACV for Q4 showed a significant 16% year-over-year increase in CC, which is viewed as a more accurate measure of business growth. In light of these results, Rosenblatt has marginally increased its forecast for ANSYS and introduced its fiscal year 2026 estimates.

The firm also referenced the anticipated acquisition of ANSYS by Synopsys (NASDAQ:SNPS), which is expected to be completed in the first half of 2025. The deal terms include $197 in cash and 0.345 Synopsys shares per ANSYS share, which currently values ANSYS shares at approximately $340 each. Rosenblatt sees the Q4 performance of ANSYS as a positive indication for Synopsys, suggesting that the pending acquisition has not hindered ANSYS’s business execution.

In other recent news, Ansys reported several significant developments that could impact investors. The company is expected to be acquired by Synopsys for $35 billion, with the deal anticipated to receive approval from EU antitrust regulators. To address competition concerns, Synopsys plans to divest Ansys PowerArtist and its Optical Solutions Group. Additionally, the UK’s Competition and Markets Authority is considering accepting remedies proposed by Ansys and Synopsys, which include the divestment of certain product lines. In another collaboration, Ansys has integrated its simulation software into the Automated Driving Perception Hub with Cognata and Microsoft (NASDAQ:MSFT), enhancing the testing and validation of automotive sensors. Ansys also announced a partnership with Concepts NREC to streamline turbomachinery design, integrating computational fluid dynamics software into the design process. These recent developments reflect Ansys’ ongoing efforts to innovate and adapt in the evolving technology landscape.

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