On Wednesday, Piper Sandler adjusted its outlook on Bentley Systems Inc . (NASDAQ:BSY), raising the stock price target to $63 from the previous $60, while reaffirming an Overweight rating on the shares. The firm's analysis follows Bentley's first-quarter results, which showcased an 11.0% growth in constant currency annual recurring revenue (ARR), and an 11.5% increase excluding China.
The first quarter was anticipated to be the lowest point for ARR growth, with expectations to align more closely with the full year 2024 guidance of 10.5% to 13% growth in subsequent quarters.
The company experienced delays in Maximo work within its Cohesive segment, leading to a downturn in professional services. This trend is expected to persist through the second quarter before improving. Despite this, Bentley Systems reported a notable increase in profitability, with adjusted operating margins, including stock-based compensation (SBC), expanding to 33.3%, a rise from 28.8% in the previous year.
The improved margins can be partly attributed to a strategic realignment of resources at the end of the fourth quarter of 2023, with the first quarter of 2024 being the first to fully reflect the impact of these changes. Bentley's performance was also bolstered by its robust position in the infrastructure engineering sector and the growing potential in new areas such as Asset Analytics.
Piper Sandler's commentary highlighted the company's strong execution and entrenched industry position as key factors underpinning their positive stance. The firm's analyst specifically noted the healthy first-quarter results as reinforcing their confidence in Bentley's operational capabilities, prompting the increase in the price target to $63.
InvestingPro Insights
In light of Piper Sandler's recent outlook on Bentley Systems Inc. (NASDAQ:BSY), it's pertinent to consider additional insights from InvestingPro. The company's impressive gross profit margin stands at 79.48% for the last twelve months as of Q1 2024, indicative of strong operational efficiency and cost management. Moreover, Bentley Systems is currently trading near its 52-week high, with its price at 99.21% of this peak, reflecting the market's positive sentiment towards the company.
InvestingPro Tips suggest that while Bentley Systems operates with a moderate level of debt, it's notable that analysts predict the company will be profitable this year, which aligns with its profitability over the last twelve months.
For readers looking to delve deeper into Bentley Systems' financial health and market position, there are additional InvestingPro Tips available, which can be explored further with a subscription. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and gain access to a total of 11 InvestingPro Tips for Bentley Systems to inform your investment decisions.
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