Piper Sandler Lifts Aspen Price Target By 19% To Reflect His Higher Growth Outlook Post Emerson Deal

  • Piper Sandler analyst Weston Twigg revisited his segment analysis on Aspen Technology, Inc AZPN to reflect commentary after the Emerson deal, in which AZPN received two new software suites. 
  • Twigg sees the combined company set to grow annual revenue between 9-13%, up from the 5-12% pre-deal, and raised his FY2024 revenue moderately to reflect the midpoint. 
  • He does not expect AZPN to accomplish its longer-term target of mid-teens (~15%) annual spend growth through FY2024. 
  • However, transitioning from perpetual licenses to the OSI suite could be a moderate revenue headwind. 
  • AZPN has indicated that its addressable market has likely doubled post-deal, to around $12 billion. The market likely includes markets where Emerson is reasonably strong, such as pharma, water/wastewater, pulp and paper, and food and beverage, as well as markets directly related to new software suites, such as mining and electrical grid optimization.
  • He saw the near-term end market breakdown as: 40% Oil and Gas; 16% EPC; 18% Chemicals; 22% Power; 4% other.
  • He rated the stock Neutral and bumped the price target by 19% to $189 to reflect his higher growth outlook and better-than-expected sentiment post-deal.
  • Price Action: AZPN shares traded lower by 2.09% at $192.68 on the last check Tuesday.
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