Analyst Note| Julie Bhusal Sharma |
Ansys experienced a stellar second quarter, with top- and bottom-line results surpassing the high end of the company’s guidance, largely from closing the largest new business deal in its history, thanks to a major high-tech company. While Ansys is still experiencing weakness in its SMB customers, which make up about a third of the company’s revenue base, guidance for the full year has improved, including annual contract value, or ACV, growth. Consequently, we are raising our fair value estimate for the wide-moat simulation standard to $225 per share from $196 per share. Still, we view Ansys shares as largely overvalued at this time, and we suggest waiting for a greater margin of safety before investing in this high-quality name.