Analyst Note| Julie Bhusal Sharma |
PTC’s first-quarter earnings results came in with flying colors, reporting revenue well beyond FactSet consensus and non-GAAP earnings per share $0.31 higher than FactSet consensus. PTC’s strength in the start to the fiscal year was driven by lengthy and large-size deals in both their core and growth segments. Lower churn than expected was the icing on the cake, driving revenue further upwards. The next quarter will see results reflecting the integration of PTC’s most recent acquisition, as the company acquired Arena Solutions on Jan. 19. While the SaaS product lifecycle management, or PLM, company will make up about 3% of PTC’s business once integrated, the nonorganic growth from Arena along with improving conditions from pandemic related vulnerability have pushed outlook expectations upward. As a result, we increase our fair value estimate to $88 per share from $80 per share for the narrow-moat name. Despite the raise and our belief that PTC will continue to see success driven by its increasing mix of SaaS offerings, we view PTC shares as overvalued, with the stock trading near $125 per share after hours.