Like fellow CAD/PLM software developer Dassault (OTCPK:DASTY), PTC (NASDAQ:PTC) has almost always looked expensive by conventional valuation metrics, but the shares have nevertheless outperformed the market over the last decade as the company has built a strong business on the back of its CAD and PLM software offerings. Now, as the industrial world embraces the next wave of automation, PTC is looking at its suite of Internet of Things (or IoT) offerings to drive the next wave of growth.
PTC is on strong footing in the emerging industrial IoT space with its partnerships with the likes of GE (NYSE:GE) and Amazon (NASDAQ:AMZN), and the market potential is there. PTC shares could still have double-digit annualized upside from here if the company can deliver high single-digit revenue growth and high teens FCF growth, but it is not as though those are conservative assumptions for a company whose underlying demand is still tied to cyclical industries. I would also note that M&A potential is a potential floor here, as even with the high multiples there would likely be several interested parties in a bid for PTC.
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PTC Looking To IoT To Drive The Next Leg