Analyst Note| Julie Bhusal Sharma |
On Nov. 17, Dassault Systemes hosted its virtual 2020 capital market day. The biggest news at the event was Dassault revealing its 2024 non-IFRS EPS expectations. Dassault disclosed its guidance that non-IFRS EPS will reach EUR 6.00 per share in 2024 driven by popularity in the company’s 3DExperience platform, which offers all of Dassault’s solutions in one place. This assumption assumes non-IFRS revenue growth of about 10% over the next five years. These expectations fall behind our former forecasts in which we forecast non-IFRS EPS of EUR 7.21 per share in 2024 as a result of significant growth expected in submarkets like drug development and product lifecycle management. As a result, we’ve moderated assumptions in the midyears of our explicit forecast for the total addressable market, or TAM, penetration, while boosting such expectations in later years, to incorporate smoother benefits to Dassault from an accelerating TAM, rather than more frontloaded growth. We remain slightly more bullish than management, as we now expect non-IFRS EPS of EUR 6.58 per share in 2024. All in, this leaves our fair value estimate of EUR 140 ($167) for wide-moat Dassault unchanged. With shares falling by 1% to near EUR 152 per share after the day’s events, we view Dassault fairly valued.