Ansys Beats in Q4 as It Continues Decoding Once Unsolved Modelling Challenges; Shares Overvalued

Ansys reported excellent fourth-quarter results, beating management’s guidance across all key metrics. Management's 2022 looks promising as ACV growth remains strong and obtainable as Ansys releases new simulation functionalities and customers move to lease licenses from perpetual ones. All in all, we are maintaining our $242 fair value estimate for the wide-moat simulation standard. After shares are up 1% upon the news to near $299 per share, we continue to view shares as overvalued and recommend waiting for a greater pullback before investing. We think the discrepancy between our forecasts and the market lies in long-term growth rates. Still, we continue to believe Ansys' software benefits from robust switching costs that make Ansys a wide-moat company with incredible stability, as it dominates the simulation market through a breadth of use cases. We believe our model, which implies a five-year compound annual revenue growth rate of 8% and midcycle 45% operating margin, is already baking in exceptional and realistic outcomes.