PTC Has Upside With The Internet Of Things Says Citi
PTC Inc’s (NASDAQ: PTC) mix of software solutions could boost revenue and profitability while the company undergoes a transition, Citi’s Kenneth Wong said in a report. He initiated coverage of the company with a Buy rating and a price target of $48.
PTC is a leading provider of CAD, lifecycle management and IoT software solutions, has a highly motivated direct salesforce and has increased SKU flexibility, all of which would offer advantages versus peers, analyst Kenneth Wong mentioned.
Margin Expansion To Boost Earnings, Cash Flows
PTC’s financial targets for FY21 call for 10 CAGR and EBIT margins in the low 30s. Wong believes these targets are achievable. He added, “We believe 25-50% ACV uplift and a lower touch sale will deliver on the operating goals. We feel there could be additional margin upside of 1-200bps from organic cost cutting.”
Call Option On IoT
Although media and investor attention is currently on the consumer IoT market, the opportunity across industrial applications, or IIoT, could significantly outgrow the consumer market, the analyst commented.
“While the overall revenue contribution remains small (~$70M run rate), we believe PTC’s portfolio of products (CAD, PLM, SLM, IoT) makes it one of the best positioned software companies to capitalize on the $1T opportunity,” the Citi report noted.
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Latest Ratings for PTC
|Nov 2016||Goldman Sachs||Initiates Coverage On||Buy|
|Oct 2016||Brean Capital||Initiates Coverage on||Buy|
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