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ANSYS at 52-Week High on Growing Portfolio, Collaborations


Share price of ANSYS Inc. ANSS rallied to a new 52-week high of $132.07, eventually closing a bit lower at $132.01 on Sep 12. The outperformance can be attributed to the company’s expanding product portfolio and consistent execution, which are driving top-line growth and profitability.

We note that ANSYS has beaten the Zacks Consensus Estimate for earnings in all of the trailing four quarters with an average positive surprise of 5.02%.

Last quarter, earnings increased 6.5% year over year to 99 cents on revenues of $264.4 million, up 13% at constant currency. ANSYS also raised its fiscal 2017 guidance.

Moreover, the stock has returned 42.7% year to date, substantially outperforming the industry it belongs to. ANSYS has a market cap of $10.89 billion.

Currently, ANSYS holds a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Factors

ANSYS is a dominant player in the high-end design simulation software market and its expanding portfolio has been a key catalyst. The company recently unveiled ANSYS Discovery Live that supports fluids, structural and thermal simulation applications.

ANSYS, Inc. Revenue (TTM)

ANSYS, Inc. Revenue (TTM) | ANSYS, Inc. Quote

The software enables engineers to experiment with design ideas and see instant feedback. Notably, the combination of NVIDIA’s NVDA graphic processing units (GPUs) and ANSYS Discovery Live simulation software makes result calculations a thousand times faster compared with traditional methods.

Moreover, acquisitions like Computational Engineering International (CEI), SpaceClaim, Reaction Design and Evolutionary Engineering have expanded the company’s expertise in processing and analysis of simulation data, 3D modelling, chemistry simulation and cloud-based composite analysis and optimization technology.

These have eventually expanded ANSYS’s total addressable market (TAM). The company can now address the needs of diverse industries like IoT, next-gen 5G product designs, autonomous vehicle, mobile products as well as high-performance chips for advanced driver assistance systems (ADAS). Moreover, growing demand for energy efficient products is also a key catalyst.

Additionally, collaborations with leading vendors like Autodesk ADSK, Synopsys SNPS and NVIDIA are expected to drive demand for the company’s products.

However, declining perpetual license revenues will hurt top-line growth at least in the near term. Moreover, weakness in Europe and adverse foreign currency exchange rates are other major concerns.

Estimate Revisions

The Zacks Consensus Estimate for fiscal 2018 and fiscal 2019 has been steady at $3.86 and $4.14 over the last 30 days.

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