Baird has exhibited confidence in PTC Inc. (NASDAQ: NASDAQ:PTC) by increasing its price target to $226 from the previous $216.
The firm retains an Outperform rating on the stock, signaling optimism about the company's prospects. The adjustment reflects a positive outlook based on partner feedback and market analysis.
The Baird analyst noted that partner checks indicate an in-line F4Q environment with average growth continuing at approximately low-double-digit percentages.
The company's involvement in Application Lifecycle Management (ALM) and Service Lifecycle Management (SLM (NASDAQ:SLM)) is seen as contributing to faster-than-average growth. This suggests a stable performance despite broader market conditions.
Looking ahead to fiscal year 2025, partners have expressed expectations for net-new Annual Recurring Revenue (ARR) performance to pick up pace. While PTC itself may not provide guidance to this effect, the consensus anticipates an ARR increase in the range of 10-13% year-over-year. The analyst's commentary underscores the potential for PTC's performance to exceed these expectations if economic conditions improve.
In other recent news, PTC Inc. reported an 11.5% year-over-year growth in annual recurring revenue, aligning with expectations, and a 19% increase in operating cash flow and free cash flow. The company has entered into a strategic collaboration with Amazon (NASDAQ:AMZN) Web Services (AWS) to enhance its Onshape cloud-native computer-aided design offerings, aiming to advance product enhancements, customer adoption, and artificial intelligence initiatives.
On the leadership front, PTC Inc. welcomed Robert Bernshteyn, a General Partner at ICONIQ Capital, to its Board of Directors. In analyst ratings, BMO Capital maintained an Outperform rating and raised PTC Inc.'s stock price target to $206. Loop Capital also retained a Buy rating on PTC shares, while Mizuho Securities downgraded the stock from Buy to Neutral, citing sluggish demand trends and a slower-than-expected transition to a SaaS business model.
InvestingPro Insights
PTC Inc.'s strong market position, as highlighted in Baird's analysis, is further supported by recent data from InvestingPro. The company's impressive gross profit margin of 79.81% for the last twelve months as of Q3 2024 underscores its operational efficiency, aligning with the positive partner feedback mentioned in the article. This robust profitability is complemented by a solid revenue of $2.22 billion over the same period.
InvestingPro Tips reveal that PTC is trading near its 52-week high, which corroborates Baird's optimistic outlook and increased price target. Additionally, the tip indicating that 13 analysts have revised their earnings upwards for the upcoming period suggests growing confidence in PTC's future performance, potentially supporting the expectations for accelerated ARR growth in fiscal year 2025.
It's worth noting that PTC's P/E ratio of 74.23 indicates a high earnings multiple, which investors should consider in light of the company's growth prospects. For a more comprehensive analysis, InvestingPro offers 12 additional tips that could provide valuable insights into PTC's financial health and market position.
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