PTC Sees Strong Renewals, Countering Delays in Customer Deals; Raising FVE to $111

Narrow-moat PTC’s first-quarter earnings revealed solid results amid macroeconomic weakness. While currency continues to be a significant headwind for PTC, the firm found broad-based strength in overall renewals, even when not accounting for pricing increases. As a result, PTC beat our earnings expectations and surpassed the high end of their annual recurring revenue, or ARR, forecasts. Although PTC is still experiencing delays in customer expansions due to customer conservatism, the firm is raising guidance for the year following the solid results this quarter. As a result, we are increasing our fair value estimate to $111 per share from $106 per share for the narrow-moat name.