Wide-Moat Ansys' Q3 Results Strong, Though Currency Headwinds Undeniable; Rare Opportunity to Buy

Ansys’ third-quarter results were strong, beating management’s annual contract value, revenue, operating margin, and EPS outlook and leading to a raised constant-currency outlook all around for the year. We are maintaining our $242 fair value estimate for the simulation software standard, as fourth-quarter results are expected to come in slightly lower than originally forecast due to the strong U.S. dollar offsetting the effects of constant-currency strength that will seep into the long run. We view Ansys shares as nicely undervalued, trading near $211. We consider this to be a rare opportunity to buy into the wide-moat name, as we believe the stock is typically overvalued in normal economic times due to the topnotch quality of the company, which normally leads to a premium, in our view.