Aspen Technology (NASDAQ:AZPN) was downgraded to Hold from Buy at Loop Capital Friday, with a price target of $170 per share.
Analysts said in a note that the firm is cautious about the stock ahead of its upcoming earnings release.
"Our more cautious view is based on increasing concerns over management's FY24 outlook for annual contract value," the analysts wrote.
They explained that this is due to "1) recent profit warnings in the chemical industry over slowing demand that's likely to persist longer than anticipated and unfavorably impact AZPN's business and 2) our expectations that recent stumbles in the "growth" DGM business, which signals deeper integration and execution concerns, will likely remain a drag on growth into 2024."
In addition, the firm is increasingly concerned over the pending Micromine acquisition that's been stuck in an overly extended regulatory approval process.
"So while we remain believers in the longer-term story — provider of mission-critical software to process manufacturers, strong cash generator, and transitioning to a broader industrial play — the move for now is to drop to a Hold until we get a better sense that FY24 will bring another leg of accelerating growth," stated the analysts.