Ansys' Q2 Shows Robust Annual Contract Value Growth; Outlook Raised, but Shares Still Look Pricey

Wide-moat Ansys beat FactSet consensus' and our second-quarter non-GAAP estimates as macroeconomic weakness appears to be having little effect on research and development investment, to which the company's software is heavily leveraged. Ansys gave slightly rosier annual contract value guidance for the year, contrasted by lower absolute midpoints for revenue and non-GAAP earnings per share guidance due to foreign-exchange headwinds. We are maintaining our $242 fair value estimate for the simulation software leader. We view the shares as overvalued, trading near $289, and thus recommend investors wait for a better point of entry before buying this high-quality stock.