Company Reports

We maintain our $195 fair value estimate for wide-moat Aspen Technology after the firm reported fiscal third-quarter results above our expectations. Despite good performance, we continue to see deals being pushed out due to customers exercising caution amid macro uncertainty. Unsurprisingly, management lowered its fiscal 2024 guidance. While the near term looks uncertain, we do not think the slowdown in deal activity has any bearing on AspenTech in the long term, and our estimates beyond 2024 are intact. However, we struggle to reconcile management’s confidence last quarter regarding the current environment with the lowered guidance this quarter. In our view, the firm is well positioned to benefit from capital-intensive industries facing the challenge of meeting increasing resource demand in a sustainable way. We view the stock as fairly valued.

Wide-moat AspenTech reported fiscal second-quarter results which came in slightly below our revenue and profitability estimates. One large renewal worth $5.4 million in annual contract value, or ACV, and free cash flow did not materialize as expected, which drove the modest shortfall. Had this deal been renewed as expected, results would have been in line with our expectations. We view this deal slippage as normal and do not believe it has any bearing on AspenTech long-term. The firm is near to closing this transaction and expects to do so in the third quarter. In our view, the firm is well-positioned to capitalize on secular energy and electrical grid trends and will benefit from capital-intensive industries facing the challenge of meeting increasing resource demand in a maintainable way. After considering results and guidance, we maintain our $195 per share fair value estimate and view the stock as fairly valued.

Wide-moat AspenTech reported fiscal first-quarter results that were below our revenue and profitability estimates. While results in the quarter were light due to seasonal weakness beyond our expectations, management reiterated its fiscal 2024 targets. The firm also announced it is entering an expansion phase following the integration of its three businesses, aiming to capture demand opportunities as capital expenditure budgets improve. In our view, the firm is well-positioned to capitalize on secular trends and will benefit from capital-intensive industries facing the challenge of meeting increasing resource demand in a durable way. After considering results and guidance, we maintain our $195 per share fair value estimate. With shares down around 2% after hours, we view the stock as slightly undervalued.

AspenTech is an industry leader in asset optimization software, providing solutions that enable industrial users to design, operate, and maintain their manufacturing processes for maximum performance. In our view, AspenTech is well-positioned to capitalize on secular trends, acquisition opportunities, and its sticky existing customer base to pave a long runway for growth, as evidenced in our wide moat rating.

Wide-moat AspenTech reported fiscal fourth-quarter results which came in slightly below our estimates. The firm continues on its integration journey, and we are pleased to see sequential improvement as the firm applies learnings from prior quarters' challenges. While the integration remains a work in progress, we believe the firm is on the right path to generate sales and profitability momentum entering fiscal 2024. The firm also canceled its acquisition of Micromine due to political uncertainty in Russia. In our view, the firm is well-poised to capitalize on secular trends and will benefit from capital-intensive industries facing the challenge of meeting increasing resource demand in a sustainable way. After considering results and guidance, we maintain our $195 per share fair value estimate. With shares up materially after hours, we see them as fairly valued and would wait for more progress on milestones for the integration before investing in the stock.

Wide-moat Aspen Technology reported fiscal third-quarter results that were below our revenue and profitability expectations. Macro headwinds are hurting renewals, the chemicals industry is slowing spending, subsurface science and engineering, or SSE, contracts are not elongating as expected, and digital grid management, or DGM, sales cycles have not contracted as planned. These factors affected results as well the outlook, which management lowered for the year. We see these factors continuing throughout this year and even bleeding into calendar 2024, so we are lowering our near-term estimates and reducing our fair value estimate to $195 per share from $215. We believe AspenTech is well positioned to capitalize on secular trends and will uniquely benefit from capital-intensive industries facing the challenge of meeting increasing resource demand in a sustainable way. That said, we would wait for signs of improvement in demand and more progress on DGM integration efforts before investing in the stock.

Aspen Technology is an industry leader in asset optimization software, providing solutions that enable industrial users to design, operate, and maintain their manufacturing processes for maximum performance. In our view, AspenTech is poised to capitalize on secular trends, acquisition opportunities, and its sticky existing customer base to pave a long runway for growth, as evidenced in our wide moat rating.

AspenTech is an industry leader in asset optimization software, providing solutions that enable industrial users to design, operate, and maintain their manufacturing processes for maximum performance. In our view, AspenTech is well-poised to capitalize on secular trends, acquisition opportunities, and its sticky existing customer base to pave a long runway for growth, as evidenced in our wide moat rating.

Wide-moat AspenTech reported second-quarter results that fell short of our revenue and profitability expectations, as it focuses on integrating the heritage Aspen; digital grid management, or DGM; and subsurface engineering, or SSE businesses following the Emerson Electric merger. Management remains confident in its outlook for fiscal 2023 and maintained most guidance measures while raising non-GAAP EPS. We believe the firm is well-positioned to capitalize on secular trends and will uniquely benefit from capital-intensive industries facing the dual challenge of meeting increasing resource demand in a sustainable way. We are also encouraged by AspenTech’s steady acquisition momentum, closing in on its Micromine deal. We continue to fine-tune our postmerger model, resulting in a decrease of our fair value estimate to $215 per share from $220. This revision accounts for our caution surrounding recessionary and geopolitical risks, as well as some caution around synergies until we see evidence they are being delivered. With after-hours shares trading around $184, we view the shares as increasingly attractive.

We retain our fair value estimate for AspenTech of $220 as the company navigates its new era amid a shifting environment. While our estimate is lower than the current share price, which we view as inflated from the market’s excitement following Aspen’s transaction with Emerson Electric, we believe the company has a bright outlook. In our view, AspenTech is well-poised to capitalize on secular trends, acquisition opportunities, and its sticky existing customer base to pave a long runway for growth, as evidenced in our wide moat rating with a stable trend.

AspenTech is an industry leader in asset optimization software, providing solutions that enable industrial users to design, operate, and maintain their manufacturing processes for maximum performance. In our view, AspenTech is well-poised to capitalize on secular trends, acquisition opportunities, and its sticky existing customer base to pave a long runway for growth, as evidenced in our wide moat rating.

We believe Aspen Technology is a leader in the process automation software niche. We think the firm has ample room to grow over the next decade within its existing customer base, which tends to be particularly sticky, as evidenced by our wide moat rating.

Wide-moat AspenTech completed its first full quarter following the merger with Emerson Electric and embarked on integration efforts between the Heritage Aspen, Digital Grid Management and Subsurface Engineering Businesses. Management adjusted the range on select figures within their fiscal 2023 outlook, due to market uncertainty and anticipated investment in integration between businesses. Still, AspenTech is confident that it is on track to achieve intended synergies and is optimistic in rising end market demand further driving long-term profitability. We believe the firm is well-positioned to capitalize on secular trends and will particularly benefit from capital-intensive industries undergoing the dual challenge of meeting increasing resource demand in a sustainable way. We are also pleased to observe healthy momentum in acquisition activity, with the firm adding data management firm Inmation to their portfolio. We continue to fine tune our post-merger model, resulting in an increase in our fair value estimate to $220 per share, from $205. We have some skepticism around synergies until we see evidence they are being delivered, and therefore view shares as overvalued.

We believe Aspen Technology is a leader in the process automation software niche. We think the firm has ample room to grow over the next decade within its existing customer base, which tends to be particularly sticky, as evidenced by our wide moat rating.

Wide-moat Aspen Technology completed its first quarter since closing on the merger transaction with Emerson Electric, with promising results for the top and bottom lines as they enter a new era. Management began the new chapter by providing a solid outlook for fiscal 2023, confident that they are on track to achieve intended synergies between the businesses and deliver on long-term goals of driving double-digit growth for revenue and profitability. We believe the firm is well-positioned to capitalize on secular trends and will particularly benefit from capital-intensive industries undergoing the dual challenge of meeting increasing resource demand in a sustainable way. We are also pleased to see the company already staking claim on its first acquisition, Micromine, in July for about $660 million dollars. With more data and a more constructive outlook than we were anticipating along with the annual roll-forward of our DCF model, we are raising our fair value estimate to $205 per share from $160 and view the shares as fairly valued.

We believe Aspen Technology is a leader in the process automation software niche. We think the firm has ample room to grow over the next decade within its existing customer base, which tends to be particularly sticky, as evidenced by our wide moat rating.

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.

We believe Aspen Technology is a leader in the process automation software niche. We think the firm has ample room to grow over the next decade within its existing customer base, which tends to be particularly sticky, as evidenced by our wide moat rating.

Wide-moat Aspen reported second-quarter results that fell short of both our model and FactSet expectations on the top and bottom line. The quarter’s miss was balanced by a healthy raise to full-year guidance. We believe the conflicting measures reflect the material impact that timing of renewals has on Aspen’s top line, and view overall business health as gradually improving from pandemic troughs. Spend environments among Aspen’s customers continue to recover, with notable improvement in the refining vertical and consistent strength in chemicals. With Aspen on track to close the proposed merger with Emerson Electric in the fourth quarter of fiscal 2022 (ending in June), we are maintaining our fair value estimate of $160 per share for Aspen and view shares as modestly undervalued.

We believe Aspen Technology is a leader in the process automation software niche. We think the firm has ample room to grow over the next decade within its existing customer base, which tends to be particularly sticky, as evidenced by our wide moat rating.