Ansys: Solid Q4, But Not Worth 11% Rise To 37x Non-GAAP EPS
(Preview) Company Update (ANSS US) (Neutral)
Summary
Ansys shares rose 11% to $294.75 on Thursday after Q4 2022 results overnight, and are now at 37x 2022 Non-GAAP EPS.
Q4 was a solid finish to 2022. Full-year Annual Contract Value grew 14%, excluding currency, and Non-GAAP EPS grew 8% in dollars.
2023 outlook includes a 10%+ Annual Contract Value growth, but much lower EPS growth and a large rise in Share-Based Compensation.
Including Share-Based Compensation costs would have reduced Non-GAAP EPS by 25%; Ansys' P/E is 49.2x on GAAP EPS.
We expect a de-rating in Ansys’ P/E to offset much of its expected EPS growth, reducing mid-term returns to single digits. Avoid.
Introduction
We review ANSYS, Inc. after shares rose 10.5% on Thursday following Q4 2022 results released overnight.
We downgraded our rating on Ansys from Buy to Hold in May 2020, when the share price was $263.51. Ansys' share price is currently 12% higher after nearly 3 years, though having first risen to above $400 in late 2021.
Q4 2022 represented a strong finish for the …