2023-11-14 09:20:05 ET
BofA lowered rating on software developer Ansys ( NASDAQ: ANSS ) to “underperform” from “buy” amid concerns around broader demand trends and US-China export restrictions.
The brokerage, which also lowered price target to $295 from $356, said that while the company’s management has sized the immediate impact from the restrictions, the second order impact on the broader supply chain is still uncertain.
“We see risks these restrictions could impact Ansys’s competitive positioning in the region, as we have seen at other firms following Huawei being added to the export restrictions in 2019,” BofA added.
Ansys stock down 0.7% in trading before the bell on Tuesday.
Earlier this month, Ansys pointed out that the incremental restrictions for export to China negatively impacted its third-quarter revenue and Annual contract value (ACV) by $20 million.
“For the full year 2023 guidance, we expect these incremental restrictions and processes to be a $25 million headwind to ACV and revenue relative to our full year guidance provided in August, which will mute our growth in China in 2023,” Ansys said, adding that the restrictions will also mute ACV and revenue growth in China in 2024.
BofA said it sees China restrictions dragging the company’s ACV growth until the third quarter of 2024.
Seeking Alpha analysts and Seeking Alpha’s Quant Ratings consider the stock “hold”, while Wall Street analysts rated it a “buy”.
The Pennsylvania-based company, which has a market valuation of over $25 billion, has fallen nearly 22% so far this year.
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BofA lowers Ansys rating to 'underperform' amid China export restrictions