Oppenheimer has adjusted its price target for PTC Inc. (PTC, Financial), reducing it from $210 to $170. Despite this revision, the firm maintains an Outperform rating on the company's shares. This decision reflects a recalibration based on reduced estimates and prevailing market valuations.
The outlook for PTC suggests a mildly appealing scenario, with market expectations likely already incorporating potential reductions to what is considered a cautious forecast. Notably, the company's outlook for Annual Recurring Revenue (ARR) does not yet reflect potential enhancements in go-to-market strategies.
However, PTC continues to express confidence in its free cash flow projections. This financial metric is anticipated to gain support from favorable foreign exchange impacts, which could further bolster the company's fiscal health moving forward.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 18 analysts, the average target price for PTC Inc (PTC, Financial) is $197.89 with a high estimate of $240.00 and a low estimate of $143.56. The average target implies an upside of 30.50% from the current price of $151.64. More detailed estimate data can be found on the PTC Inc (PTC) Forecast page.
Based on the consensus recommendation from 20 brokerage firms, PTC Inc's (PTC, Financial) average brokerage recommendation is currently 2.1, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for PTC Inc (PTC, Financial) in one year is $180.57, suggesting a upside of 19.08% from the current price of $151.64. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the PTC Inc (PTC) Summary page.
PTC Key Business Developments
Release Date: February 05, 2025
- ARR (Annual Recurring Revenue): $2.277 billion, up 11% year over year on a constant currency basis.
- Free Cash Flow: $236 million in Q1, up 29% year over year.
- Cash and Cash Equivalents: $196 million at the end of Q1.
- Gross Debt: $1.548 billion, with a leverage ratio of 1.7 times.
- Share Repurchase: $75 million used to repurchase 383,000 shares in Q1.
- Guidance for Fiscal '25: ARR growth of approximately 9% to 10%; Free cash flow of $835 million to $850 million.
- Q2 Free Cash Flow Guidance: Approximately $270 million.
- Debt Repayment: $205 million paid down in Q1.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- PTC Inc (PTC, Financial) reported first-quarter results slightly better than anticipated, demonstrating resilience in a challenging macro environment.
- The company has made significant progress in reshaping its go-to-market strategy to be vertically oriented, energizing both the team and customers.
- PTC Inc (PTC) is focusing on five core areas of its product portfolio, which are expected to create significant customer value, including PLM, ALM, SLM, CAD, and SaaS.
- The company is actively integrating AI into its offerings, with new AI-powered features launching soon, starting with ServiceMax.
- PTC Inc (PTC) has a strong cash flow position, with a 29% year-over-year increase in free cash flow, and is actively repurchasing shares under a $2 billion share repurchase program.
Negative Points
- PTC Inc (PTC) continues to face a sluggish selling environment, impacting close rates and necessitating a back-half loaded year for growth.
- The company's go-to-market changes are expected to take time to fully realize their intended effects, potentially delaying growth momentum until later in the fiscal year.
- There is ongoing pressure from foreign exchange fluctuations, which could impact cash flow guidance.
- PTC Inc (PTC) is experiencing some churn in contracts, although these are expected to return to ARR later in the fiscal year.
- The company acknowledges that its net new ARR can be volatile due to various factors, including the timing of bookings and renewals.
