On Thursday, Bentley Systems Inc. (NASDAQ:BSY) stock, a global provider of comprehensive software solutions for advancing infrastructure, received an Outperform rating from investment firm William Blair. The firm highlighted Bentley's robust financial profile, which includes a Rule-of-50 status, EBITDA margins at 34%, and consistent growth in annual recurring revenue (ARR) in the low double digits.
The investment firm's coverage initiation points to the company's advantageous position due to current infrastructure mandates, which are expected to provide several growth opportunities in the coming years. Bentley Systems' business model is noted for its high customer retention, with a subscription model that yields 90% recurring revenues, a gross dollar retention rate of 98%, and a net dollar retention rate of 110%.
William Blair also compared Bentley's stock valuation to its peers, noting that shares are trading at approximately 34 times the firm's 2025 EBITDA estimates, in contrast to its peers, which trade around 26 times. The coverage acknowledges potential risks to their positive outlook, including the possibility of increased competition, the variability of infrastructure spending, and the rate at which the industry adopts these technologies.
InvestingPro Insights
Turning to the latest data from InvestingPro, Bentley Systems Inc. (NASDAQ:BSY) stands out with a robust gross profit margin of 78.66% for the last twelve months as of Q4 2023, underscoring the company's efficiency in managing its cost of sales relative to its peers. This aligns with the investment firm William Blair's positive perspective on Bentley's financial performance.
The company's P/E ratio, as adjusted for the last twelve months of Q4 2023, is 47.26, which indicates that the stock is trading at a premium based on its earnings. However, with a PEG ratio of 0.6 for the same period, the stock may be more reasonably priced when considering its earnings growth rate. Additionally, Bentley Systems is trading at 93.16% of its 52-week high, reflecting investor confidence and a strong market position.
InvestingPro Tips also reveal that analysts have revised their earnings upwards for the upcoming period, and the company is predicted to be profitable this year, which may offer further confidence to investors. For those interested in deeper analysis, there are additional InvestingPro Tips available for Bentley Systems, which can be accessed with the coupon code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
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