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Boston, Massachusetts-based PTC Inc. (PTC) is a software company that aids manufacturing companies in designing, operating, and managing products. Valued at a market cap of $18.8 billion, the company offers a comprehensive portfolio of software solutions consisting of computer-aided design modeling, product lifecycle management, data orchestration, and experience creation products.
Companies valued at $10 billion or more are typically classified as “large-cap stocks,” and PTC fits the label perfectly, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the software - application industry. Serving diverse industries such as automotive, aerospace, manufacturing, and healthcare, PTC helps businesses drive innovation and operational efficiency. The company benefits from strategic partnerships with Microsoft Corporation (MSFT), Rockwell Automation, Inc. (ROK) and NVIDIA Corporation (NVDA), enhancing its cloud-based and AI-driven solutions.
Despite its notable strength, this software company has slipped 23.1% from its 52-week high of $203.09, reached on Dec. 12, 2024. Moreover, it has declined 15.1% over the past three months, underperforming the broader Technology Select Sector SPDR Fund’s (XLK) 10.6% downtick over the same time frame.
In the longer term, PTC has fallen 17% over the past 52 weeks, lagging behind XLK’s marginal decline over the same time frame. Moreover, on a six-month basis, shares of PTC are down 11.2%, compared to XLK’s 5.6% loss.
To confirm its bearish trend, PTC has been trading below its 200-day moving average since early February, and has remained below its 50-day moving average since mid-December, 2024, with slight fluctuations.
On Feb. 5, PTC delivered its Q1 results. The company posted adjusted EPS of $1.10, which, despite a slight decline from the year-ago quarter, surpassed Wall Street estimates by a notable margin of 20.9%. Meanwhile, its revenue advanced 2.7% year-over-year to $565 million, surpassing the consensus estimate by 2.4%. Adding to the positives, its constant currency annual recurring revenue (ARR) increased 10.6% annually, reaching $2.3 billion.
However, despite reporting strong financial performance, its stock plunged 9.6% the following day. What primarily disappointed investors was its lowered full-year guidance. PTC now expects revenues between $2.4 billion and $2.5 billion, and projects adjusted EPS in the range of $5.30 to $6, weaker than its previous guidance.
PTC has also underperformed its rival, ANSYS, Inc.’s (ANSS) 7.7% decline over the past 52 weeks and 2.5% gain on a six-month basis.
Despite PTC’s recent underperformance relative to its broader sector, analysts remain highly optimistic about its prospects. The stock has a consensus rating of “Strong Buy” from the 18 analysts covering it, and the mean price target of $203.22 suggests a 30.1% premium to its current levels.
