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PTC Finishes a Strong Q3 As Firms Continue Their SaaSy Switch; Maintain $88 FVE; Shares Overvalued

Julie Bhusal Sharma Equity Analyst

Analyst Note

| Julie Bhusal Sharma |

PTC posted solid third-quarter results as the company continued to benefit from customers’ continuation on the digital transformation journey. Revenue and profitability clocked in above our expectations primarily due to PTC’s strong performance in the core and growth product groups. At the same time, however, we are incorporating Morningstar’s assumption of higher taxes in our model, based on probability-weighted estimates for a corporate tax hike. These two changes lead to offsetting shifts in fair value drivers. As a result, we maintain our $88 fair value estimate for the narrow-moat name and view the shares as overvalued.

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Company Profile

Business Description

PTC offers high-end computer-assisted design (Creo) and product lifecycle management (Windchill) software as well as Internet of Things and AR industrial solutions. Founded in 1985, PTC has 28,000 customers, with revenue stemming mostly from North America (45%) and Europe (40%).

Contact
121 Seaport Boulevard
Boston, MA, 02210
T +1 781 370-5000
Sector Technology
Industry Software - Application
Most Recent Earnings Mar 31, 2021
Fiscal Year End Sep 30, 2021
Stock Type Classic Growth
Employees 6,243

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