Analyst Note| Dan Romanoff, CPA |
Wide-moat Aspen reported third-quarter earnings that missed on the top- and bottom lines both in relation to consensus expectations as well as company guidance. Aspen did not close deals quite at the pace it expected. Management has lowered 2021 guidance across the board to reflect the change in tone around transaction completions. A large portion of the miss can be attributed to the refining vertical, which Aspen discussed as being affected by the polar vortex that spread through refinery-heavy U.S. regions earlier in the quarter, the extension of global lockdowns, particularly in Europe and India, and the conservative 2021 budgets that were created during volatile macroeconomic environments and low oil prices earlier in the year. Despite the serious impact current macroeconomic downturns are having on Aspen’s business, we remain confident in the underlying value and applicability of Aspen’s solutions, as reflected in a full pipeline and continuing significant customer engagement activity. Considering these factors, we are lowering our fair value estimate to $145, from $148, and now view shares, which have dropped in the aftermarket to around $130, as undervalued.