AspenTech Earnings: Despite a Light Result, We Remain Confident in Long-Term Demand

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.