AspenTech Earnings: Fundamentals Steady Despite Lighter Deal Activity and Lowered Outlook

We maintain our $195 fair value estimate for wide-moat Aspen Technology after the firm reported fiscal third-quarter results above our expectations. Despite good performance, we continue to see deals being pushed out due to customers exercising caution amid macro uncertainty. Unsurprisingly, management lowered its fiscal 2024 guidance. While the near term looks uncertain, we do not think the slowdown in deal activity has any bearing on AspenTech in the long term, and our estimates beyond 2024 are intact. However, we struggle to reconcile management’s confidence last quarter regarding the current environment with the lowered guidance this quarter. In our view, the firm is well positioned to benefit from capital-intensive industries facing the challenge of meeting increasing resource demand in a sustainable way. We view the stock as fairly valued.