Dassault Systemes Earnings: Weaker Results From Lower Automotive Volumes; Shares Fairly Valued

Dassault Systemes reported third-quarter results slightly under our expectations and on the low end of management's expectations. The computer-assisted design firm isn't immune to general deal delays seen throughout the industry and the third quarter had worse performance in the automotive market in Europe and the US than expected. As a result, revenue guidance for the year was taken down a notch, although the earnings outlook is reconfirmed. We reiterate our EUR 37 fair value estimate for the wide-moat firm, which leaves shares fairly valued, in our view. We continue to believe that the headwinds Dassault is experiencing are short-term in nature and the company's strong switching costs remain well intact.