Analyst Note| Dan Romanoff, CPA |
Wide-moat Aspen reported strong first-quarter results that exceeded FactSet expectations on the top and bottom line. As Aspen’s end-markets recover and their spending environments subsequently improve, the demand landscape has begun to reflect the value proposition of Aspen’s operational efficiency and sustainability focused solutions more accurately. We are encouraged by the uptick in the refining vertical, where higher industry-wide margins suggest promising spending behavior in coming quarters, and in the chemicals vertical, where business improved despite lingering supply chain issues. On the back of Aspen’s deep domain expertise in its respective verticals, we have long considered Aspen an attractive target for acquisition by an industrial conglomerate looking to expand its software portfolio. On Oct. 11, Aspen confirmed the proposed merger with select Emerson Electric software assets, which we view as value-accretive additions to Aspen’s existing platform. For now, we are maintaining our fair value estimate of $160 per share for Aspen and view shares as modestly undervalued.