AZPN - Aspen Technology falls as KeyBanc Capital downgrades ahead of Q4

2023-07-26 08:53:18 ET

Aspen Technology ( NASDAQ: AZPN ) shares fell around 1% in pre-market trading as investment firm KeyBanc Capital Markets downgraded the industrial software company ahead of a "make-or-break" fiscal fourth quarter.

Analyst Jason Celino lowered his rating on Aspen Technology ( AZPN ) shares to sector-weight from overweight, noting that the results  - slated to occur on August 1 - are exceptionally important for investors and the company may not live up to the 10% annual contract value growth guidance for fiscal 2024.

"While we believe AspenTech's [long-term] secular tailwinds and sustainability opportunities remain intact, we are lowering our estimates and downgrading to Sector Weight to reflect the  heightened [near-term] execution risk," Celino wrote in an investor note.

Celino added that the weakness in the company's chemicals segment is likely to cause "near-term" growth challenges for its Heritage business, due in part to macro concerns, with a slowdown in customer spending and lengthening sales cycles.

"We believe visibility in chemicals could remain challenged for two+ quarters until industry destocking dynamics normalize and customers reset capex budgets in early CY24," Celino added.

Analysts are largely cautious on Aspen Technology ( AZPN ). It has a HOLD rating from Seeking Alpha authors , while Wall Street analysts rate it a HOLD . Conversely, Seeking Alpha's quant system, which consistently beats the market, rates AZPN a SELL .

More on Aspen Technology

• Aspen Technology: Industrial Software Leader Valuation Appealing After Plunge
• Aspen Technology up 1.2% on $100M buyback
• Aspen Tech plunges to 9-month low on Q3 results; William Blair downgrades stock

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