Analyst Note| Julie Bhusal Sharma |
Wide-moat Ansys opened its fiscal year on a positive note by posting first-quarter results that surpassed management's guidance in all metrics, most notably in annual contract value. Additionally, management raised guidance for the full fiscal year in ACV, revenue, earnings per share, and operating cash flows with all metrics at constant currency. On a nonconstant currency basis, the outlook is materially impacted by the strengthening of the U.S. dollar and accounts for an estimated $47 million in foreign exchange headwinds to ACV. Full-year revenue also stands to be impacted by macroeconomic conditions, with an estimated $15 million impact stemming from Russia and Belarus sanctions, coupled with $45 million in foreign exchange headwinds. As such, we are maintaining our $242 fair value estimate for Ansys. Shares are trading down to around $270 per share, and we continue to view shares as overvalued.