Ansys Earnings: Overachievement in Q1 Speaks to Safeguarded R&D Budgets; Maintaining $262 FVE

Ansys reported robust first-quarter results, well surpassing our top- and bottom-line expectations as well as management's, thanks to broad-based growth across all regions (with Americas leading the pack). Altogether, we remain convinced Ansys will still see slight revenue acceleration in 2023, as we believe that research and development budgets are one of the least vulnerable in uncertain times due to their long-term orientation. We think it's important to stress that Ansys software is not at the mercy of its customers' total R&D headcount. Rather, Ansys receives revenue from customers based on total compute required for simulation needs. We think this lack of vulnerability is reflected in management's decision to reiterate its outlook for the year. All in all, we are maintaining our fair value estimate for the wide-moat firm at $262 per share, which places the stock in overvalued territory. We recommend investors hold off on investing in this high-quality name until the market bakes in more realistic revenue and margin assumptions for this mature company.