Piper Sandler analyst Clarke Jeffries has revised the price target for PTC (PTC, Financial), reducing it from $202 to $180, while maintaining a Neutral rating on the stock. This adjustment comes in light of PTC's reported net new Annual Recurring Revenue (ARR) for the second quarter, which reached $50 million, surpassing the company's guidance of $44 million. This represents a significant improvement after a shaky first quarter raised concerns among investors about the trajectory and consistency of the anticipated FY25 ARR growth.
With FY25 already facing challenges due to a significant go-to-market transition, the firm's outlook on ARR growth remains cautious. Despite the uncertain macroeconomic conditions, Piper Sandler highlights that 60% of PTC's full-year free cash flow has been generated in the first half of the year. This substantial cash flow performance could provide investors with some assurance regarding the stock's valuation, even if further economic destabilization occurs.
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 $189.39 with a high estimate of $240.00 and a low estimate of $143.56. The average target implies an upside of 22.35% from the current price of $154.79. 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 16.65% from the current price of $154.79. 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: April 30, 2025
- ARR Growth: 10% year-over-year, reaching $2.326 billion on a constant currency basis.
- Free Cash Flow Growth: 13% year-over-year, with $279 million generated in Q2.
- Leverage Ratio: Reduced to 1.5 times after paying down $500 million of senior notes.
- Cash and Cash Equivalents: $235 million at the end of Q2.
- Gross Debt: $1.393 billion, with a $155 million reduction in Q2.
- Share Repurchase: $75 million used to repurchase 463,000 shares in Q2 under a $2 billion authorization.
- Guidance for Free Cash Flow: Raised low end to $840 million for fiscal 2025.
- Q3 Free Cash Flow Guidance: $230 million to $235 million.
- ARR Guidance Adjustment: Adjusted to 7%-9% growth due to macroeconomic uncertainties.
- Fully Diluted Share Count: Expected to remain approximately flat in fiscal 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- PTC Inc (PTC, Financial) reported a 10% year-over-year growth in Annual Recurring Revenue (ARR) and a 13% increase in free cash flow.
- The company successfully paid down $500 million of senior notes, reducing its leverage ratio to 1.5 times.
- PTC Inc (PTC) continued its share buyback program, utilizing $75 million to repurchase 463,000 shares.
- The company made significant customer wins, including expansions in Windchill PLM and new Codebeamer ALM wins with global automotive OEMs.
- PTC Inc (PTC) advanced its product portfolio and generative AI initiatives, launching new AI features across its key focus areas.
Negative Points
- PTC Inc (PTC) adjusted its ARR guidance, lowering the high end from 10% to 9% due to macroeconomic uncertainties.
- The company introduced a new low end of 7% for its ARR guidance, reflecting potential delays or downsizing of deals.
- Global trade dynamics and macro pressures are causing uncertainty, potentially affecting customer buying behaviors.
- PTC Inc (PTC) noted that some customer deals might be smaller or delayed due to ongoing economic conditions.
- The company acknowledged that the macro environment could lead to lengthened sales cycles and downsized deals.
