Ansys: 4% Bounce After Q4 Results, Still 25% Below Peak

(Preview) Company Update (ANSS US) (Neutral)

Summary

• Ansys stock is up 4% after Q4 results overnight. At $309.30, while it is still 25% down from its late 2021 peak, we think it is too expensive.

• In 2021, Ansys had a mid-teens growth in contract value, but just a 10% growth in EPS and a flat Operating Cash Flow.

• 2022 EPS growth is also guided to be below 10%. Fundamentally, we believe long-term EPS CAGR will be in high-single-digits.

• With a P/E that is already at 42x and likely to be flat or be down in our view, this means annualized investor return will likely be below 10%.

• We also believe Non-GAAP Net Income overstate the size of earnings, due to high share-based compensation costs and acquisition spend.

Introduction

We review our Hold rating on ANSYS, Inc., following the release of Q4 2021 results overnight on Wednesday (February 23). (A Hold rating on a stock means it should be avoided by active investors.) As of Thursday 12:45 EST, Ansys stock is up 4.2% at $309.30, its lowest level since March 2021.

We downgraded our rating on Ans…