PTC Earnings: Close Rates a Headwind to Q3 Revenue but Pipeline Healthy; Shares Overvalued

Narrow-moat PTC delivered mixed results slightly below our estimates on the top and bottom line, but robust annual run rate, or ARR, growth. ARR, a leading indicator of business performance, was up 12% year over year, reassuring our belief that the firm will see a healthy turnaround after this near-term weakness. After adjusting for guidance updates, we are increasing our fair value estimate to $156 from $138 and view the stock as overvalued.