Ansys Posts Bright, Broad-Based Beat in Q4; Raising FVE to $262, but Shares Still Overvalued

Ansys reported stellar fourth-quarter results, well surpassing our top- and bottom-line expectations due to broad-based strength and ample execution. We think the strong results support our thesis that Ansys' portfolio of simulation offerings is top notch with little commensurable competition. With a more robust guide for actual cash value in fiscal 2023, which we believe influences ACV levels thereafter, we are adjusting our model, which yields a fair value estimate raise to $262 per share from $242 per share. After shares are up about 12% upon the news to near $298 per share, we continue to view shares as overvalued and urge waiting for a greater pullback before investing. While we believe Ansys' wide moat is crash-tested, we think there is a cap to the firm's long-term growth rates and margin expansion. We remind investors that the stock has been volatile, having dipped to $200 per share in October. We believe the mismatch between revenue and ACV is partly responsible for the volatility.