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.