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3 Reasons Why Goldman Sachs Turned Bullish On Ansys

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3 Reasons Why Goldman Sachs Turned Bullish On Ansys

Shares of engineering simulation software company ANSYS, Inc. (NASDAQ: ANSS) are likely to outperform, according to Goldman Sachs. 

The Analyst

Analyst Gabriela Borges upgraded Ansys from Neutral to Buy and increased the price target to $207.

The Thesis

Ansys is the most insulated from long-term competitive threats from large technology computing platforms such as Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN) and Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG), Borges said, citing conversations with customers, channel partners and consultants.

Borges attributed her forecast for continued outperformance to three factors: 

  • Company-specific efforts to improve positioning and productivity.
  • A positive secular outlook supported by new price points that aid increased penetration, the tie-up with PTC Inc (NASDAQ: PTC) and the long-term opportunity presented by safety-critical machine learning applications.
  • The potential for margin improvement after troughing in 2018. 

Ansys has enacted a sales force realignment for targeted improvement in key market segments, an increased technical salesforce and hiked channel investments, the analyst said. 

Goldman Sachs is 3 percent above the Street in its EPS estimate for fiscal 2018 and 6 percent above consensus for fiscal 2019 EPS.

Although the stock appears expensive, Borges said its premium to peers on a next-12-month free cash flow basis is in-line with historical averages. The multiples will hold if estimates are upwardly revised, she said. 

The Price Action

Ansys shares were up more than 3 percent at $182.10 at the time of publication Wednesday.

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Photo by Tmilnthorp/Wikimedia. 

Latest Ratings for ANSS

DateFirmActionFromTo
Sep 2019MaintainsBuy
Sep 2019MaintainsOutperform
Sep 2019MaintainsBuy

View More Analyst Ratings for ANSS
View the Latest Analyst Ratings

Posted-In: Gabriela Borges Goldman SachsAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

 

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