Improving Results Indicate a Turning Point for Aspen; Maintaining $160 FVE

Wide-moat Aspen Technology reported third-quarter results slightly below our expectations, but the company remains optimistic that the improving spending environment in oil and gas and easing macro headwinds will continue to drive growth in the coming quarters. To reflect this, management cautiously maintained its top-line guidance and lifted its bottom-line outlook, which we believe indicates that overall business health is slowly improving. With Aspen on track to close the proposed merger with Emerson Electric in the June quarter of fiscal 2022, we maintain our fair value estimate of $160 per share for Aspen and view shares as slightly undervalued.