UPDATE: Brean Capital Starts PTC Inc. (PTC) at Buy
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(Updated - October 7, 2016 9:56 AM EDT)
Brean Capital initiated coverage on PTC Inc. (NASDAQ: PTC) with a Buy rating and a price target of $55. Analyst Yun Kim sees PTC as the best way to play the current secular trend around IoT (Internet of Things).
"In our view, the IoT trend will fundamentally alter the way all companies approach product design and development process and manage related service opportunities during the product lifecycle. PTC's core product lifecycle management (PLM) and services lifecycle management (SLM) solutions, along with its IoT platform solutions, are well positioned to help manufacturers introduce smart IoT features into their products and help them monetize on this fundamental shift in the way companies interact with their customers. We note that PTC is an early market leader in this emerging IoT market with a commanding 18% share, with the next closest vendor at 4% share," said Kim.
The analyst added, "The company has outlined a disciplined approach to capturing this emerging IoT market opportunity and driving incremental growth. It expects its revenue and bookings to accelerate to 10%plus, recurring revenue mix to increase to 90% of software revenue by increasing subscription revenue mix and non-GAAP operating margin to reach 30%+ in FY21. With the company showing accelerated bookings growth over the past three quarters, we believe its current subscription model transition is progressing well, which should continue to drive the stock higher. Once market adoption of IoT technology accelerates, we expect PTC's overall business to benefit, which should serve as the next catalyst for the stock."
Shares of PTC Inc. closed at $46.25 yesterday.
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