Analyst Note| Dan Romanoff, CPA |
Wide-moat Aspen reported mixed fourth-quarter results that fell short on revenue but exceeded our model and FactSet consensus on adjusted earnings. Management blamed the revenue miss on unclosed transactions rather than a lack of business prospects. Management’s 2022 outlook was broadly in line with expectations, with a back-end loaded year based on a demand environment that remains subdued. The quarter saw relief in some verticals, such as refining and chemicals, where improvement is seen as spending trends tick up. Outside of the core business areas, Aspen continues to emphasize the development of AspenOne AI capabilities, as evidenced by the quarter’s enhancements to version 12.1. Despite the serious impact current macroeconomic downturns continue to have on Aspen’s business, we remain confident in the underlying value and applicability of Aspen’s solutions, as is reflected in a full pipeline and continuing and increasing customer engagement. Based largely on our annual model roll, we are raising our fair value estimate to $151 from $145, and view shares as modestly undervalued.