Bentley: This Narrow-Moat CAD Vendor Has Potential in Its Platforms, Though Shares Are Overvalued

We have initiated coverage on Bentley Systems with a $42 fair value estimate and a narrow moat rating. Since the 1980s, Bentley Systems has carved out its niche in the fragmented computer assisted design market, targeting public works and utilities needs, covering anything from roadway design to wind analysis. These applications are anything but discretionary in nature, as we see little chance of its users going back to pencil and paper for the design and modeling of infrastructure assets. But beyond these mainstay applications, over the last decade, Bentley has elevated the makeup of its offerings by expanding its scope from purely single applications to platforms. Such platforms track project management and assets after the design and simulation phases of its applications, and we think they bode significant growth potential as their respective markets remain underpenetrated—like digital twin deployment. In addition to its newer platform approach, small to medium-sized businesses remain a growth avenue for the firm as they make up about half of Bentley’s $30 billion total addressable market but only about one third of revenue.