PTC's Recent Transparency & Conservative Framework Change This Analyst's Tune To Positive Side

  • KeyBanc analyst Jason Celino upgraded PTC Inc PTC from Sector Weight to Overweight with a $155 price target.
  • The analyst acknowledged that the company's clear cloud strategy, growing capabilities, and LT commitment has helped drive share gains and enabled the company to maintain above-market growth in CAD and PLM for the past three years and will continue.
  • PTC has provided much transparency around its FY23 growth framework, laying out several scenarios impacting bookings and churns considering different macro conditions.
  • Based on checks, Celino believes demand is fairing better than this conservative framework and could drive new organic bookings growth of at least 5-10% throughout FY23.
  • Through a combination of durable growth opportunities in CAD and PLM, along with operational discipline, the analyst believes PTC could be a perennial +25% FCF grower through FY25. 
  • Additionally, Celino believes execution and compounding of this growth could be the catalyst to drive +5-turns of multiple expansion toward premium Industrial software averages of 28-30x in FY24.
  • The analyst revised FY23 and FY24 estimates to incorporate the close of the ServiceMax acquisition. 
  • Price Action: PTC shares traded higher by 3.49% at $134.49 on the last check Monday.
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